Rider Levett Bucknall's recently released International Report confirms Brisbane's ranking in the top 20 most costly global construction markets.
Prepared by RLB Research and Development, the bi-annual International Report (IR) uses global cost data to derive indexed measures of relative costs of construction within and between 33 key global and local markets.
Rider Levett Bucknall's report indicates that as at October 2009, New York, London and Darwin are the three most costly cities in the global analysis in which to build. Brisbane is ranked as the 18th most costly city globally in which to build a project - moving up from its 19th ranking as at January 2009.
Interestingly, building a major project in Brisbane is reported as being more costly than key global cities of Hong Kong (3.8% more), Macau (11.9% more), Dubai (9.7% more), and Las Vegas (13.6% more), which are all suffering from the effects of the Global Financial Crisis.
Since January 2009, Rider Levett Bucknall found that two-third of the global cities surveyed had experienced a contraction in construction costs. Brisbane's construction costs contracted by 5.6% during this period, whilst the key construction markets of Macau, Dubai and Las Vegas contracted 12%, 15.9% and 8.9% respectively in cost.
Mr Mark Burow, Managing Director RLB Queensland commented, "The majority of global construction markets peaked in the third quarter of 2008 and one year on, we are seeing growth moderating and even contracting in some markets."
"Whilst recording a significant decrease in construction costs, Brisbane is coming off a very high base, having experienced substantial inflation in tender prices for many years", he said.
"Planned activity levels have plummeted for the city, particularly in the commercial and industrial sectors. Non-residential construction with its dependence on finance and risk modelling has suffered significantly as a consequence of the GFC. Late 2008 and into 2009, contractors slashed their margins within a highly competitive tender environment in a bid to replenish workbooks from rapidly diminishing construction opportunities," he said.
The RLB report found that there is little current activity from the private sector in Brisbane other than projects that were committed prior to the impact of the GFC.
Mr Burow continued, "Developers with existing sites are examining options, generally residential apartments, to identify feasible development opportunities but finance remains a major hurdle. Banks are generally prepared to fund smaller projects with high pre-sales which minimises their risk exposure in terms of security, funding and duration."