The U.S.  is the most expensive country for construction, says the latest global cost analysis by U.K. professional services consultant Turner & Townsend, with six American cities now among the list's top 10—dislodging London and Hong Kong for the first time. 

"These figures have been fueled by the strong U.S. dollar, but also the impact of Bidenomics," says the consultant. Related to the latter, it notes impact of the federal Inflation Reduction Act and CHIPS Act, both enacted in 2022, "as driving investment in secondary markets across the U.S.," particularly in manufacturing.

“What we’ve seen is this demand really reshaping the global picture of investment," says John Robbins, USA managing director and North America head of real estate at Turner & Townsend. "More construction activity is driving up competition and bidding conditions, and now more than half of the top 10 most expensive cities to build in being found in the States.” 

New York City ranks highest on the list, with an average building cost of $5,451 per square meter, and San Francisco closely behind at $5,200 per sq m. Boston, Los Angeles, Chicago and Seattle also make the top 10, according to the survey. Geneva and Zurich remain in that group from last year, but in higher places, while Tokyo and Osaka have moved down.

Labor shortages and supply chain issues continue to drive prices up as well. “The competition for skills to deliver a pipeline of contending programs across sectors and state boundaries is compounding the escalation of labor costs,” Robbins says. “Another component in rising prices is the trend to de-risk supply chains with a near-shoring of material procurement. While reducing disruption on one hand, we’ve seen a knock-on impact on costs and availability due to capacity constraints in the chain.”

Going forward, “we’re expecting costs to remain sticky this year, although inflation is easing,” he says. Turner & Townsend, which was acquired by U.S.-based real estate firm CBRE in 2021, expects inflation in North America to reach 5.7% this year, down from 10.6% in 2022.

The survey sees India, Indonesia and Vietnam as "emerging hotspots for construction activity."