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Hong Kong ranked 8th as one of the most expensive cities in the world to build, according to Arcadis 2023 International Construction Costs Index

Hong Kong ranked 8th as one of the most expensive cities in the world to build, according to Arcadis 2023 International Construction Costs Index

HONG KONG, April 19, 2023 /PRNewswire/ -- Arcadis, the leading global design & consultancy organization for natural and built assets, announced the release of its annual Arcadis International Construction Costs Index (ICC). Out of 100 cities, Hong Kong ranks number one as the most expensive city in Asia, featuring at number eight on the list worldwide. Macau follows the city at number eleven, and the majority of the least expensive cities remain in China.

Hong Kong's real GDP shrank by 3.5% in 2022, as the total export of goods plunged amid a sharp deterioration in the external environment, coupled with the Covid shutdown in China. Domestic demand slackened, triggered first by the fifth wave of the Covid epidemic and subsequently by tightened financial conditions. 

The 2023 Arcadis ICC Index covers 100 of the world's large cities across six continents. The cost comparison was developed covering twenty different building types, including residential, commercial, and public sector developments, and is based on a survey of construction costs, a review of market conditions and the professional judgement of Arcadis' global team of experts. The calculations are based in USD and indexed against the price range for each building type relative to Amsterdam.

The cost data behind the ICC rankings also accounts for changes to specification, with low carbon design having an impact when it comes to construction pricing. Short term cost uplifts associated with upgraded specifications in both the UK and Europe can range from 5-7% for new homes, and 7-10% for commercial buildings. However, with the need to mitigate against climate change and more stringent carbon reduction targets coming to the fore, sustainable buildings in prime locations are increasingly in high demand. This is resulting in the application of a 'green premium' when it comes to how the most sustainable assets are being valued. 

This means that, when prioritizing expenditure, owners and investors need to take a long-term view that will be critical when it comes to preserving value. It will be important to balance current asset, owner and occupier needs with the additional costs associated with, for example, complying with future energy performance and decarbonization standards, and mitigating against the effect of climate change exposure. A 'do nothing' approach – although often perceived as lower cost and lower risk – has the potential to accelerate what Arcadis has termed the 'obsolescence horizon', driven by net-zero requirements.

"Current trends in the market broadly highlight investment in a sustainable recovery and carbon neutrality. In Hong Kong, with the built environment accounting for 70% of the city's carbon emissions, the government has committed to reduce its absolute carbon emissions by 26%-36% before 2030 and strives to achieve carbon neutrality by 2050. For the construction industry, this emphasizes an increasing need to evaluate the carbon performance of buildings and infrastructure in Hong Kong, from raw material extraction to the end of construction." said Francis Au, Arcadis' Growth Director for Greater China.

For more information, the full report can be downloaded here.

ABOUT ARCADIS

Arcadis is the leading global design & consultancy organization for natural and built assets. We maximize impact for our clients and the communities they serve by providing effective solutions through sustainable outcomes, focus and scale, and digitalization. We are 36,000 people, active in more than 70 countries that generate €4.0 billion in gross revenues. www.arcadis.com 

 

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