Turner & Townsend Report: Most Expensive Cities to Build In Worldwide

As global geopolitics shift and deglobalisation accelerates, construction markets worldwide are experiencing both challenges and new opportunities. Countries are increasingly investing in manufacturing and defence to secure supply chains, fuelling construction booms in select regions, according to Turner & Townsend’s Global Construction Market Intelligence Report 2025.

United States Leads in Construction Costs

The report reveals that New York City and San Francisco are currently the most expensive cities in the world for construction, with average costs of US$5,744/m² and US$5,504/m², respectively. The United States dominates the top rankings, with five cities in the global top ten: Los Angeles, Chicago, and Philadelphia follow closely behind.

High construction labour costs are a key driver, averaging US$76/hour across the US, and reaching as high as US$131.40/hour in New York. These elevated wages are exacerbated by a skills shortage, with 87% of North American markets reporting deficits in critical trades such as mechanical, engineering, and plumbing.

Europe and Japan Also Rank High

The top five most expensive construction markets are rounded out by Zurich, Geneva, and London, with costs hovering around US$5,386–5,385/m². Despite broader economic uncertainty, relative political and economic stability in Western Europe and the UK is attracting global investment, particularly in defence and industrial infrastructure.

Japan is another key player, with Tokyo ranked eighth most expensive at US$4,647/m², and four other Japanese cities appearing in the global top 15. This places Japan as the second most expensive country for construction globally, with an average cost of US$4,514/m². Growth in the country’s data centre and high-tech sectors is propelling demand.

Construction Resilient Amid Deglobalisation

Despite rising geopolitical tensions and uncertain global outlooks, the construction sector is proving resilient. The turbulence of recent years has fostered more adaptable project delivery models, allowing the industry to navigate cost pressures and supply chain disruptions more effectively.

“Geopolitical tensions and increasing polarisation are changing where and how investment flows,” said Neil Bullen, Managing Director of Global Real Estate at Turner & Townsend. “While uncertainty is limiting confidence in some regions, it is creating opportunities in others.”

Countries choosing to re-shore or near-shore production are seeing upticks in activity. Asian markets such as Vietnam, India, and Malaysia are attracting investment due to their comparatively low construction costs, with cities like Mumbai averaging just US$723/m².

Labour Shortages Add Inflationary Pressure

A global shortage of skilled labour continues to drive up construction costs. 72% of global markets report shortages, with constraints worsened by migration restrictions. This imbalance is expected to sustain above-target inflation in the sector, with global construction cost inflation forecast at 3.8% in 2025 and 4.0% in 2026.

“Agility and vigilance are vital,” Bullen added. “Clients need to try new approaches—from foundational efforts like training local workers, to adopting innovative AI and digital solutions across the project lifecycle.”

As nations reassess economic priorities and industries adapt to supply chain realignment, construction is emerging as a critical pillar of global resilience and future growth.

Top 10 global rankings: