From New York to Sapporo: the world’s most expensive construction markets

Leading global construction markets have reaccelerated after two years of inflationary pressure, yet the industry is once again facing rising costs. Building prices in the largest metros have hit historic highs, according to Turner & Townsend’s report, as shown here. Cost growth is being driven by U.S. tariff policy, currency swings, supply-chain disruptions, and skilled-labour shortages.

City ranking

The world’s most expensive construction market remains New York, where the average cost per square metre has reached $5,743.7. High-density development, record employment and activity in biotech, green economy and high-tech sectors keep costs at historic levels. Major infrastructure schemes contribute a large share of growth, sustaining demand even amid a moderate economic slowdown.



San Francisco ranks second at $5,504.4/sq m. The market acutely feels a shortage of qualified specialists and higher materials prices, while complex permitting adds time and risk. Demand is under constant pressure from the office needs of tech tenants and new projects linked to AI growth. Premium residential schemes aimed at the high-end segment add further momentum.

Zurich rounds out the top three at $5,386.4/sq m. It remains Europe’s priciest construction hub: limited land supply, strict standards and high labour costs keep the market from cooling. Geneva follows at the same level — $5,386.4. Here, robust domestic demand and a stronger franc have reinforced the market, while scarce development sites keep prices elevated.

In fifth place is London ($5,385.1), jumping four spots in a year. The rise is attributed to a stronger pound and the revival of activity in financial services. The city is reaffirming its status as a global capital hub: prime-class schemes and office retrofits remain key demand drivers.

Next come the U.S. metros. Los Angeles at $4,786.4/sq m posted the most notable annual increase—propelled by post-disaster rebuilding and supply bottlenecks. Chicago ($4,695.2) climbed into seventh on infrastructure upgrades and downtown modernisation.

In eighth place is Tokyo, where the average cost reached $4,646.7/sq m. After a pause, the city returned to the top ten thanks to rising investment in data centres, pharma and semiconductors. Japan is delivering major projects tied to Expo Osaka as well as manufacturing in Kyushu and Hokkaido.

Philadelphia, at $4,604.1/sq m, entered the global ranking for the first time, reflecting growth in corporate fit-outs and residential builds, plus expansion in healthcare and education. Completing the top ten is Japan’s Sapporo ($4,577.3), where active investment in science, technology and logistics is turning the north of the country into a new construction cluster.

Sector leaders

In 2025 global construction is tilting toward capital-intensive, tech-heavy asset classes. Data centres have become the top-earning projects in 26 of 99 markets, cited by 21.2% of respondents. AI and digital-service growth is fuelling demand—especially in London, Tokyo, Melbourne, Paris and Frankfurt. These assets combine high profitability with record upfront costs due to a limited pool of specialist contractors and stringent requirements for power, cooling and site selection.



Corporate tenant projects (office fit-outs) were highlighted in 13 markets, while industrial, manufacturing and distribution facilities were noted in 11 countries. Despite hybrid work, demand for Class A space in key business hubs remains strong. Transport projects were recorded in 10 markets and ranked second in importance, flagged by 15.2% of respondents. Chinese cities, Singapore and major U.S. markets are investing in ports, rail, highways and airports to back urbanisation and infrastructure modernisation.



Industrial/distribution parks and large mixed-use schemes are advancing in Vietnam, Japan and the U.S. In Asia, Hanoi and Ho Chi Minh City have become growth nodes as supply-chain diversification spurs new logistics builds. In the U.S., Atlanta, Austin, Charlotte, Detroit and San Antonio are consolidating as industrial clusters.
The residential sector remains a priority for fast-urbanising regions. 12.1% of respondents highlighted housing—primarily in Nairobi, Lagos, New Delhi and Manila, where population growth intensifies the need for new homes.

Labour and supply pressures

Rising labour costs remain a core driver of construction inflation. The shortage of skilled workers continues to cap sector capacity: conditions are still critical in Australia and New Zealand, and tight in Europe and North America despite some stabilisation. The most expensive labour markets—Switzerland, Denmark and the U.S.—push project budgets higher. In Asia and Latin America, partial improvement stems from labour migration, though inflows to Saudi Arabia have exacerbated shortages across the Gulf.

This skills gap is likely to persist for years. An ageing workforce, weak intake of new talent and rising wage bills will keep pressure on timelines and costs, embedding a structural vulnerability into the global market.

Supply-chain issues also linger, though their scale is gradually shrinking. Disruptions are most pronounced in electrical gear and HVAC used in data-centre builds. Lower oil prices vs 2022 briefly eased budgets, but wage growth largely offset the benefit. Competitive intensity in tendering is normalising: over half of global markets are now balanced, while contractors in North America and Asia still face strong price pressure.

Inflation and trade policy

Construction inflation has begun to cool—4.15% in 2024—reflecting stabilising materials prices and industry adaptation. It is expected to edge down to 3.9% in 2025 and tick up slightly to 4% in 2026. Europe should remain the most stable region (around 2.5%), while Africa will retain the highest risks due to currency and political factors. In Asia, dynamics will be mixed: China is set to slow on weak property markets, whereas India, Malaysia and the Philippines may accelerate on domestic demand.

Uncertainty in global trade policy will remain a key risk. New tariffs, FX volatility and geopolitics can sway materials costs, disrupt supplies and lift project outlays. Import-dependent countries are especially exposed: any rule-tightening can trigger price spikes and delays. Investment will stay uneven—jurisdictions with predictable trade regimes will gain momentum, while high-risk markets could see a slowdown.