international report market...

FIRST QuaRTeR 2015

CONSTRUCTION MARKET INTELLIGENCE

INTERNATIONAL REPORT

Disclaimer: While the information in this publication is believed to be correct at the time of publishing, no responsibility is accepted for its accuracy. Persons desiring to utilise any information appearing in the publication should verify its applicability to their specific circumstances. Cost information in this publication is indicative and for general guidance only and is based on rates as at December 2014.

Architect: Boogertman + Partners

Cover: Nedbank MenlynMaine, Pretoria, Africa

REgIONAL RELEASE

Oceania Report Apr, Oct

European Report Apr

Americas – Caribbean Nov

Gulf States TBA

Hong Kong & China Report Jan, Mar, Apr, Jul, Oct

COuNTRy SPECIfIC

UK Index Bimonthly

Singapore Mar, Jun, Sep, Dec

China Apr, Oct

USA Feb, May, Aug & Nov

New Zealand Apr, Jul, Oct, Dec

SECTOR SPECIfIC RELEASE

EMEA Hotels Monitor Mar, Sep

Latin America & Caribbean Hotels Monitor May, Oct

RIdERS dIgESTS

Riders Digest – USA Feb

Riders Digest – Singapore Jan

Riders Digests – Australian States Jan

Riders Digest – UK Jan

Riders Digest – Philippines Feb

All publications are available from rlb.com or for a hard copy please contact your local office.

The strength of Rider Levett Bucknall, the largest independent and most geographically prevalent construction cost

consultancy of its kind in the world, is that it has the most foremost construction intelligence available to it. We collect

and collate current construction data and forecast trends on a global, regional, country, city and sector basis. Rider Levett

Bucknall publish key industry intelligence publications throughout each year. For more detailed sector and city/country

information than is published within the International Report please review our regional or country specific publications.

A listing of our publications and proposed publishing date are:

SOuRCES Of INfORmATION – INTERNATIONAL REPORT

Information contained within this report has been compiled from numerous global sources and RLB offices.

Certain text and data contained within the report has been compiled from information published by the following

organisations.

International Monetary Fund – Regional Economic Outlooks imf.org

World Bank worldbank.org

Asian Development Bank adb.org

ANZ Bank research anz.com

Global Construction Perspectives and Oxford Economics globalconstruction2025.com

The Economist economist.com

Reserve Bank of Australia rba.gov.au

Colliers International colliers.com

Further information can be found on their websites.

INDEPENDENT CONSULTANTS, LOCAL KNOWLEDGE AND ExPERTISE, GLObAL NETWORK

RLB promotes a sustainable environment.Printed by Mercedes Waratah using the Ecoclean Chemical Recycling Process on Maine Recycled. This stock consists of 60% certified recycled (PCW) and 40% certified virgin fibre sourced from responsibly managed forests. Certified carbon neutral by The Carbon Neutral Company, Maine Recycled is manufactured process chlorine free and produced in a facility that operates under world's best practice ISO 14001 Environment Management System.

Rider Levett Bucknall | International Report – First Quarter 2015 3

The Rider Levett Bucknall International Report provides a half-yearly

snapshot of construction market conditions and price movements

around the world, via commentaries and analysis from Rider Levett

Bucknall directors in key locations.

The RLB International Construction Cost Relativity Index is shown on

page 5, with each location placed in its ranking spot in respect of all the

other locations in the study.

A broad overview of global construction economic issues is provided

on page 6 followed by a table of historical and forecasted movements in

RLB’s Tender Price Index for 53 key cities on page 13.

Key regional statistics are highlighted on pages 8 & 9. This data

describes the historical and projected economic conditions which the

construction industry functions within those regions or countries.

Pages 10 to 12 consider the wider issue of the construction activity

cycle for seven building market sectors, in each location, using the

RLB Construction Activity Cycle model to provide an insight into each

cities construction sectors position in the market cycle.

Pages 14 and 15 feature Construction Rate Ranges for different key

building types in cities within each region, providing an easy cost

comparison between locations.

From pages 17 to 57, RLB directors provide market intelligence

commentary, highlighting the key issues that are impacting on the

construction industry in major global cities together with providing

information relating to current construction price movements.

Building Cost Ranges and International Construction Cost Relativities

are available in the RLB Intelligence Smartphone App and via the

RLB Desktop WebApp. Further information can be found at

rlbintelligence.com

INTERNATIONAL REPORT

To download our free App visit rlb.com/app or scan the QR code.

Rider Levett Bucknall | International Report – First Quarter 20154

Rider Levett bucknall offers independent cost management, project management and advisory services. Committed to broad development through a combination of organic, acquisitive and alliancing growth, the firm recently opened new offices in Toronto (Canada), West Cumbria (UK), St Lucia and Yangon (Myanmar).

The International Report First Quarter 2015 provides global and regional construction market conditions and tender price movements via local directors around the world. Additional locations have been included in this edition, dovetailing recent growth in the firm’s global coverage.

bUILDING ON A TRUSTED VISION

RLB prides itself on exceptional

service delivery to its clients, offering

a combination of pre-eminent cost

experts, a history of proven success

and a global alliance with a broad

knowledge bank of experience.

Projects regularly demand a team

of distinguished professionals

from around the world, fostering a

collaborative approach.

RLB has proudly sponsored the

World Architecture Festival for

four consecutive years. The firm

provided services towards the

awarded projects listed on this page.

Images of some of these exceptional

world-class developments are

featured throughout this report.

RLB remains committed to its

research activities. A series of cost

reports, the firm’s renowned Riders

Digest and a world-first Smartphone

and Desktop application contain a

wide range of research advice to

assist industry colleagues and clients.

The firm recently expanded the RLB

Crane IndexTM to cover additional

regions across the world. The Crane

Index originated in Australia in 2012

as a unique gauge of construction

activity highlighting the construction

fluctuation for all sectors across

Australia. The Crane Index is now

published twice yearly in Australia,

New Zealand, North America, the

Middle East and Southern Africa.

In 2015, RLB will continue to capitalise

on its experience and strength in

defined areas of expertise to deliver

global best practice.

2014Health

Chris O'Brien Lifehouse, Australia

Office

Liberty Place, Australia

Sport Singapore Sports Hub, Singapore

2013Infrastructure

Brisbane Ferry Terminals, Australia

Leisure Led development Singapore Sports Hub, Singapore

2012Office

Darling Quarter, Australia

masterplanning

Msheireb Downtown Doha, Qatar

2011Transport Kurilpa Bridge, Australia


CITy Q1, 2015

NEW YORK AMERICAS 180

HONOLULU AMERICAS 174

LONDON EUROPE 157

HONG KONG ASIA 157

bOSTON AMERICAS 152

SAN FRANCISCO AMERICAS 151

CHICAGO AMERICAS 147

WASHINGTON AMERICAS 143

LOS ANGELES AMERICAS 136

MACAU ASIA 133

bRISTOL EUROPE 132

DARWIN OCEANIA 127

MANCHESTER EUROPE 122

SYDNEY OCEANIA 120

PERTH OCEANIA 119

bIRMINGHAM EUROPE 118

SEATTLE AMERICAS 117

CANbERRA OCEANIA 116

MELbOURNE OCEANIA 113

DOHA MIDDLE EAST 111

CHRISTCHURCH OCEANIA 111

ADELAIDE OCEANIA 110

WELLINGTON OCEANIA 107

AbU DHAbI MIDDLE EAST 106

PORTLAND AMERICAS 106

TOWNSVILLE OCEANIA 106

DUbAI MIDDLE EAST 105

RIYADH MIDDLE EAST 104

PHOENIx AMERICAS 101

DENVER AMERICAS 100

AUCKLAND OCEANIA 99

LAS VEGAS AMERICAS 98

bRISbANE OCEANIA 96

bEIjING ASIA 91

SHANGHAI ASIA 90

GUANGzHOU ASIA 85

SHENzHEN ASIA 80

INTERNATIONAL CONSTRUCTION COST RELATIVITIES


GLObAL CONSTRUCTION SUMMARY

Inflation is low and falling in almost all advanced economies. Currently all advanced-economy central banks are failing to achieve their projections of 2% inflation, and some are struggling to avoid deflation.

The majority of large, developed economies are growing more slowly than they did when their economic engines were roaring. but it is only the Eurozone that has badly disappointed in recent years.

Most analysts are optimistic about the

fall in oil prices over the past year but

the fall in the price of both copper

and iron ore is more problematic on a

global stage. The price of oil is being

driven lower by oversupply. The price

of a barrel of Brent crude has fallen

below US$50 and global supply is

forecasted to exceed demand during

2015 and 2016. Falls in the price of

both copper and iron ore could signal

worrying signs for global growth.

Copper and iron ore are important

inputs into everything from cars,

construction, infrastructure to mobile

phones, and large price fluctuations

are interpreted as an indicator of

falling global demand.

The benefit of lower oil prices may

not be enough to counter slowing

investment and consumption globally

during 2015, the World Bank has

cautioned.

Unease about the strength of

the global economy is revealing

itself. Europe’s growth is relatively

stagnant: Japan is proceeding

through “Abenomics”, forecasting

GDP growth in 2015 of 0.9%. China’s

central government is implementing

a carefully managed slowdown. The

World Bank has commented "The

sharp decline in oil prices since mid-

2014 will support global activity and

help offset some of the headwinds to

growth in oil-importing developing

economies. However, it will dampen

growth prospects for oil-exporting

countries, with significant regional

repercussions".

Among major economies, growth in

the United States rebounded during

2014 ahead of expectations after the

contraction in the Q1 2014. Growth

is projected to exceed 3% percent in

2015. Canada’s positive growth will

be offset by lower oil prices which

will slow the recovery and reduce

inflation below target.

The United Kingdom is showing

positive signs. The UK will grow at

above average rates, higher than

that of the last decade – a period

that includes the peak of the financial

crisis. The Eurozone’s growth is still

weak, with the exception of the UK

which is stronger. Norway is quite

vulnerable to the significant drop in

oil prices. With the European Central

Bank commencing their Qualitative

Easing program, analysts are finding

it difficult to become more optimistic

on growth in 2015.

With deflation in both Hungary and

Poland, there is a concrete risk that

Central Banks may cut again or

extend the period of extraordinarily

low interest rates. Growth in Turkey

and South Africa is failing to pick up,

in spite of improving inflation and

current accounts. Russia is being

squeezed by recent sanctions and

low oil prices and is facing a sharp

4.5-6.0% contraction in growth

during 2015.

Australia is forecast to expand

at a 2.9% while New Zealand is

forecasting growth of 2.8% for 2015.

A shared theme in both countries

is predicted lower inflation. Recent

data in Australia has been favourable

with employment, building approvals

and exports for Q4 2014 beating

expectations. New Zealand’s

economic performance has been

impressive, especially record building

permits, exports and home sales

for the latter months of 2014. Net

migration inflows continue to post

fresh highs, keeping consumption and

housing-related activity buoyant.

China’s economy is being slowed in

a planned way. The general trend

is a reduction in the strong growth

seen in the previous decade to a sub

7% rate. China’s slowdown, coming

after years of significant investment

in real estate and infrastructure,

is fuelling further deflationary

pressures in global industrial

markets due to the excess capacity

in China’s manufacturing, steel and

cement sectors. With cheaper oil

available, India is positioned to reap

the rewards of lower input costs.

Indonesia is likely reaching the

bottom of its cycle, while Malaysia

may suffer from the oil slump as a net

exporter.


All of this adds up to a recipe for

continued slow growth, secular

stagnation, disinflation, and even

deflation. That is why, in the absence

of appropriate fiscal policies to

address insufficient aggregate

demand, unconventional monetary

policies will remain a central feature

of the macroeconomic landscape.

Globally, there is still slack in real-

estate markets where booms went

bust (the United States, the United

Kingdom, Spain, Ireland, Iceland, and

Dubai). With bubbles in other markets

(for example, China, Hong Kong,

Singapore, Canada, Switzerland,

France, Sweden, Norway, Australia

and New Zealand) which pose a

potential new risk, as any collapse

would lower home prices in these

countries.

The International Monetary Fund

has published, that with too much

supply and too little demand there is

potential to invest in infrastructure,

which is lacking – or crumbling

– in most advanced economies

and emerging markets (with the

exception of China). With long-term

interest rates close to zero in most

advanced economies (and in some

cases even negative), the case for

infrastructure spending is indeed

compelling. But a variety of political

constraints – particularly the fact

that fiscally strapped economies

slash capital spending before cutting

public-sector wages, subsidies, and

other current spending – are holding

back the needed infrastructure boom.


yEAR

AuSTRALIA 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 2.6 % 3.6 % 2.3 % 2.8 % 2.9 % 3.0 %

GDP PER CAPITA – AUD $64,665 $65,818 $66,205 $67,267 $68,395 $69,620

ExCHANGE RATE (AS AT 1 jULY PER US$) 0.933 0.978 1.088 1.058 1.124 –

PPP RATE 1.511 1.482 1.477 1.462 1.463 1.473

INFLATION 3.3 % 1.8 % 2.5 % 2.7 % 2.6 % 2.5 %

UNEMPLOYMENT 5.1 % 5.2 % 5.7 % 6.2 % 6.1 % 5.9 %

yEAR

CHINA 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 9.3 % 7.7 % 7.7 % 7.4 % 7.1 % 6.8 %

GDP PER CAPITA – CNY ¥11,467 ¥12,284 ¥13,164 ¥14,067 ¥14,989 ¥15,936


PPP RATE 3.506 3.583 3.633 3.655 3.669 3.682

INFLATION 5.4 % 2.6 % 2.6 % 2.3 % 2.5 % 3.0 %

UNEMPLOYMENT 4.1 % 4.1 % 4.1 % 4.1 % 4.1 % 4.1 %

yEAR

EuRO AREA 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 1.6 % -0.7 % -0.4 % 0.8 % 1.3 % 1.7 %

GDP PER CAPITA – INT $ 0 0 0 0 0 0

ExCHANGE RATE (AS AT 1 jULY PER US$) - EURO 0.690 0.794 0.767 0.731 0.794 –

PPP RATE N/A N/A N/A N/A N/A N/A

INFLATION 2.7 % 2.5 % 1.3 % 0.5 % 0.9 % 1.2 %

UNEMPLOYMENT 10.1 % 11.3 % 11.9 % 11.6 % 11.2 % 10.7 %

yEAR

NEW ZEALANd 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 1.9 % 2.5 % 2.8 % 3.6 % 2.8 % 2.5 %

GDP PER CAPITA – NzD $32,520 $33,121 $33,743 $34,518 $35,218 $35,795


PPP RATE 1.486 1.456 1.468 1.475 1.459 1.468

INFLATION 4.0 % 1.1 % 1.1 % 1.6 % 2.0 % 2.0 %

UNEMPLOYMENT 6.5 % 6.9 % 6.2 % 5.7 % 5.2 % 5.2 %

yEAR

SINgAPORE 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 6.1 % 2.5 % 3.9 % 3.0 % 3.0 % 3.0 %

GDP PER CAPITA – SGD $65,954 $65,968 $67,407 $68,471 $70,101 $71,817


PPP RATE 0.891 0.889 0.877 0.866 0.863 0.861

INFLATION 5.2 % 4.6 % 2.4 % 1.4 % 2.5 % 2.7 %

UNEMPLOYMENT 2.0 % 2.0 % 1.9 % 2.0 % 2.1 % 2.2 %

MARKET DATAKEy STATISTICS


yEAR

uNITEd KINgdOm 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 1.1 % 0.3 % 1.7 % 3.2 % 2.7 % 2.4 %

GDP PER CAPITA – GbP £23,737 £23,646 £23,915 £24,520 £25,019 £25,454


PPP RATE 0.698 0.693 0.695 0.698 0.697 0.695

INFLATION 4.5 % 2.8 % 2.6 % 1.6 % 1.8 % 2.0 %

UNEMPLOYMENT 8.1 % 8.0 % 7.6 % 6.3 % 5.8 % 5.5 %

yEAR

uSA 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 1.6 % 2.3 % 2.2 % 2.2 % 3.1 % 3.0 %

GDP PER CAPITA – USD $48,152 $48,922 $49,658 $50,385 $51,613 $52,841

ExCHANGE RATE (AS AT 1 jULY PER US$) 1.000 1.000 1.000 1.000 1.000 1.000

PPP RATE 1.000 1.000 1.000 1.000 1.000 1.000

INFLATION 3.1 % 2.1 % 1.5 % 2.0 % 2.1 % 2.1 %

UNEMPLOYMENT 8.9 % 8.1 % 7.4 % 6.3 % 5.9 % 5.8 %

yEAR

LATIN AmERICA ANd THE CARRIBEAN 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 4.5 % 2.9 % 2.7 % 1.3 % 2.2 % 2.8 %

GDP PER CAPITA (INT $) 13,982 14,467 14,904 15,175 15,618 16,181

INFLATION 6.8 % 6.1 % 7.1 % N/A N/A N/A

yEAR

mIddLE EAST & NORTH AfRICA 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 4.5 % 4.8 % 2.3 % 2.6 % 3.8 % 4.5 %


INFLATION 8.6 % 9.6 % 9.2 % 7.5 % 8.0 % 7.4 %

yEAR

SOuTH AfRICA 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 3.6 % 2.5 % 1.9 % 1.4 % 2.3 % 2.8 %

GDP PER CAPITA – zAR R 37,017 R 37,426 R 37,625 R 37,642 R 37,994 R 38,536


PPP RATE 4.774 4.899 5.109 5.342 5.549 5.751

INFLATION 5.0 % 5.7 % 5.8 % 6.3 % 5.8 % 5.5 %

UNEMPLOYMENT 24.8 % 24.9 % 24.7 % 25.2 % 25.0 % 24.8 %

yEAR

ASEAN-5 2011 2012 2013 2014(f) 2015(f) 2016(f)

GDP 4.7 % 6.2 % 5.2 % 4.7 % 5.4 % 5.5 %


INFLATION 5.8 % 3.8 % 4.6 % 4.6 % 5.0 % 4.6 %

MARKET DATAKEy STATISTICS


HOuSES APARTmENTS OffICES INduSTRIAL RETAIL HOTEL CIvIL

AmERICAS

ANGUILLA

ANTIGUA AND bARbUDA

bAHAMAS

bARbADOS

bERMUDA

bOSTON

bRITISH VIRGIN ISLANDS

CAYMAN ISLANDS

CHICAGO

CUbA

DENVER

DOMINICA

DOMINICAN REPUbLIC

GRENADA

GUADALOUPE

HAITI

HONOLULU

jAMAICA

LAS VEGAS

LOS ANGELES

MARTINIQUE

MONTSERRAT

NETHERLANDS ANTILLES

NEW YORK

PHOENIx

PORTLAND

PUERTO RICO

SAN FRANCISCO

SEATTLE

ST KITTS AND NEVIS

ST LUCIA

ST VINCENT AND THE GRENADINES

TRINIDAD AND TObAGO

TURKS AND CAICOS ISLANDS

US VIRGIN ISLANDS

WASHINGTON

NP: NOT PUbLISHED

MARKET DATACONSTRuCTION SECTOR ACTIvITy

PEAK gROWTH ZONE

PEAK dECLINE ZONEPEAK ZONE

mId gROWTH ZONE

mId dECLINE ZONE

mId ZONE

TROugH gROWTH ZONE

TROugH dECLINE ZONETROugH ZONE

The RLB Construction market Activity Cycle wave graph represents the theoretical “boom / bust” business cycle of the construction economy.

The market activity arrows highlight the current point in the construction activity cycle of the major sectors within each RLB office.


CIVIC 16%HOUSES 19%

APARTMENTS 13%HOTEL 11%

RETAIL 13%

INDUSTRIAL 15%OFFICES 13%

RLB CONSTRuCTION mARKET ACTIvITy mOdEL gROWTH SECTORS vS dECLINE SECTORS

RLB CONSTRuCTION mARKET ACTIvITy mOdEL NO Of CITIES WITHIN ZONES

NUMBER OF CITIES

40

10

0

20

30

50

70

60

GROWTH DECLINE

HOUSES APARTMENTS OFFICES INDUSTRIAL RETAIL HOTEL CIVIL

NUMBER OF CITIES

25

30

5

10

15

20

0

35

40

45

50

PEAK ZONE MID ZONE TROUGH ZONE


RLB gLOBAL mARKET ACTIvITy PEAK ZONE SECTOR

RLB gLOBAL mARKET ACTIvITy mId ZONE SECTOR

RLB gLOBAL mARKET ACTIvITy TROugH ZONE SECTOR

HOUSES 10%

APARTMENTS 12%HOTEL 17%

CIVIL 12%

INDUSTRIAL 16%

RETAIL 16%OFFICES 17%OFFICES 12%

INDUSTRIAL 8%

CIVIL 16%HOUSES 12%

HOTEL 16%

RETAIL 13%

APARTMENTS 23%


HOuSES APARTmENTS OffICES INduSTRIAL RETAIL HOTEL CIvIL

ASIA

bEIjING

CHENGDU

GUANGzHOU

HO CHI MINH CITY

HONG KONG

jAKARTA

KUALA LUMPUR

MACAU

SEOUL

SHANGHAI

SHENzHEN

SINGAPORE

EuROPE

AMSTERDAM

bERLIN

bIRMINGHAM

bRISTOL

DUbLIN NP

LONDON

MANCHESTER

MOSCOW

ROME

SHEFFIELD

VIENNA

WELWYN

WOKINGHAM

AfRICA

CAPE TOWN

jOHANNESbURG

MAPUTO (MOzAMbIQUE)

PORT LOUIS (MAURITIUS)

PRETORIA

mIddLE EAST

AbU DHAbI

DOHA

DUbAI

OCEANIA

ADELAIDE

AUCKLAND

bRISbANE

CANbERRA

CHRISTCHURCH

DARWIN

MELbOURNE

PERTH

SYDNEY

TOWNSVILLE NP

WELLINGTON

NP: NOT PUbLISHED

MARKET DATACONSTRuCTION SECTOR ACTIvITy


2009 2010 2011 2012 2013 2014(f) 2015(f) 2016(f) 2017(f) 2018(f)

AfRICA

CAPE TOWN NP NP NP NP NP 7.2 6.8 5.4 4.8 4.8

jOHANNESbURG NP NP NP NP NP 7.2 6.8 5.4 4.8 4.8

MAPUTO NP NP NP NP NP 4.0 4.0 4.0 4.0 4.0

PORT LOIUS NP NP NP NP NP 5.0 5.5 6.0 6.0 6.5

PRETORIA NP NP NP NP NP 7.2 6.8 5.4 4.8 4.8

AmERICAS

bOSTON (5.0) 0.1 1.7 3.7 5.2 5.6 6.1 5.1 4.1 4.1

CHICAGO NP NP NP NP 4.7 5.2 6.1 5.1 4.1 4.1

DENVER (8.1) 0.2 1.8 1.8 2.2 3.9 5.1 5.1 4.1 4.1

HONOLULU (8.4) (0.5) 5.3 3.1 7.7 12.7 10.4 7.2 6.1 4.1

LAS VEGAS (9.0) (1.0) 1.7 2.0 0.9 3.5 4.6 5.1 4.1 4.1

LOS ANGELES (6.9) 3.2 1.9 1.0 1.8 5.9 6.1 6.1 4.1 4.1

NEW YORK (4.0) 0.8 2.5 4.3 5.9 5.3 6.1 5.1 4.1 4.1

PHOENIx (11.3) (0.1) 2.1 2.4 2.5 3.9 4.8 5.6 4.1 4.1

PORTLAND (5.7) 0.3 2.1 0.9 1.7 6.5 6.1 5.1 4.1 4.1

SAN FRANCISCO (7.6) 2.6 1.7 0.9 1.8 7.1 6.1 5.4 4.1 4.1

SEATTLE (11.6) (0.5) 1.1 2.1 3.5 4.6 5.1 4.8 4.1 4.1

WASHINGTON (6.2) 0.6 1.0 3.9 5.4 6.2 6.1 5.1 4.1 4.1

ASIA

bEIjING 1.5 4.5 5.1 0.5 1.0 2.0 1.5 2.0 2.0 2.0

CHENGDU NP NP NP NP NP 1.1 0.5 0.4 0.4 0.4

GUANGzHOU 4.4 4.1 5.6 4.1 4.1 3.0 (0.0) 2.0 2.0 2.0

HONG KONG (5.4) 7.9 9.5 7.4 9.0 8.2 7.2 6.1 3.0 3.0

MACAU (12.3) 3.8 7.2 7.2 9.3 10.4 7.2 6.1 3.0 3.0

SEOUL NP NP NP NP 2.4 1.7 1.5 1.6 1.7 1.8

SHANGHAI 2.9 4.7 7.7 3.5 2.0 (1.0) (3.0) 1.0 2.0 2.0

SHENzHEN 3.4 6.0 3.5 (1.0) 3.0 1.5 (0.5) 2.0 2.0 2.0

EuROPE

bERLIN NP NP NP NP NP 2.0 2.0 1.6 2.0 2.0

bIRMINGHAM (9.3) (1.0) (1.0) (0.8) 5.9 3.7 4.1 4.6 4.6 4.6

bRISTOL (7.9) (4.0) 3.2 (2.1) 6.8 6.9 6.7 4.9 5.2 5.4

bUDAPEST NP NP NP NP NP NP 2.5 3.0 3.3 2.5

DUbLIN NP NP NP NP 4.0 5.0 8.0 9.0 9.0 9.0

LONDON (8.6) (1.6) 3.2 1.3 3.4 5.1 5.6 4.8 4.6 4.1

SHEFFIELD NP NP NP NP 6.3 7.1 4.7 4.9 5.3 5.5

WELWYN GARDEN CITY NP NP NP NP 5.9 4.6 4.9 4.8 4.4 4.3

WOKINGHAM NP NP NP NP 5.9 6.4 5.1 4.1 3.8 3.0

MADRID NP NP NP NP NP 0.1 1.2 1.3 1.4 1.4

MANCHESTER (12.1) (1.5) 3.2 (0.8) 5.9 3.7 4.1 5.5 8.3 7.9

MOSCOW NP NP NP NP NP 1.7 0.5 3.6 3.6 3.6

WARSAW NP NP NP NP NP (0.8) 0.7 3.2 3.2 1.2

mIddLE EAST

AbU DHAbI 2.0 1.0 2.0 0.7 3.2 3.3 4.7 5.7 6.1 7.3

DOHA 4.5 1.0 3.0 4.0 3.2 4.5 5.0 5.5 6.0 7.0

DUbAI 2.0 1.0 2.0 1.4 3.2 3.7 4.7 5.7 6.1 6.5

RIYADH 2.5 2.0 2.5 3.0 4.4 5.0 4.8 4.8 4.5 4.5

OCEANIA

ADELAIDE (2.8) 2.9 (3.2) 0.1 0.9 0.6 2.5 3.0 3.5 3.5

AUCKLAND 1.0 0.0 0.0 0.0 0.8 4.1 5.6 4.8 3.5 3.0

bRISbANE (5.8) (0.7) 0.3 (0.0) (0.9) 3.5 5.1 6.1 4.1 4.1

CANbERRA 1.1 3.4 1.4 (0.6) 2.2 1.6 2.1 2.5 3.2 3.5

CHRISTCHURCH 1.5 4.6 3.0 4.7 5.1 6.1 7.0 7.0 6.6 5.3

DARWIN 3.5 2.0 (11.4) 2.0 3.0 3.0 4.0 3.5 3.5 3.0

MELbOURNE 1.7 4.2 3.0 0.0 0.2 1.5 2.5 3.0 3.5 3.5

PERTH (6.2) (1.6) 1.3 (2.3) 1.1 2.0 2.5 3.0 3.0 4.1

SYDNEY 0.0 1.0 2.2 1.2 2.0 3.0 4.5 4.5 4.5 4.0

TOWNSVILLE (4.7) 0.4 0.5 1.0 1.3 2.0 2.0 3.0 4.1 4.1

WELLINGTON 1.0 1.5 1.0 1.5 2.0 3.4 3.0 3.0 3.0 3.0

NP: NOT PUbLISHED

MARKET DATA RLB TENdER PRICE ANNuAL % CHANgE


RANgE Of COST PER m2 Of gROSS fLOOR AREA RANgE Of COST PER m2 Of gROSS fLOOR AREA

OffICE BuILdINg RETAIL HOTELS CAR PARKINg INduSTRIAL WAREHOuSE

RESIdENTIAL muLTI STOREyLOCAL

CuRRENCyPREmIum OffICES gRAdE A mALL STRIP SHOPPINg 5 STAR 3 STAR muLTI STOREy BASEmENT

LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH

AmERICAS AmERICAS

bAHAMAS USD 2,495 4,455 2,335 3,270 1,635 2,830 1,520 2,390 2,725 7,070 1,530 4,885 N/P N/P N/P N/P 1,410 2,280 1,410 4,565

bARbADOS USD 2,270 3,790 2,055 3,250 1,745 2,700 1,520 2,380 2,595 4,325 1,735 2,700 N/P N/P N/P N/P 700 2,000 3,025 4,325

bERMUDA USD 3,540 4,715 3,305 4,480 2,950 3,765 2,605 3,425 3,540 4,715 2,950 3,540 N/P N/P N/P N/P 2,355 2,990 3,055 4,715

bOSTON USD 2,155 3,015 1,885 2,635 1,290 2,260 970 1,560 2,690 4,305 1,720 2,690 645 970 860 1,185 755 1,075 1,455 3,500

bRITISH VIRGIN ISLANDS USD 2,915 3,025 2,540 3,735 2,110 3,510 1,755 2,335 4,670 6,425 2,915 4,090 N/P N/P N/P N/P 1,130 2,215 2,100 3,270

CAYMAN ISLANDS USD 2,810 4,110 2,595 3,790 2,700 3,680 2,380 3,250 2,915 3,790 2,485 3,465 N/P N/P N/P N/P 1,840 2,915 2,215 3,565

CHICAGO USD 2,475 3,875 1,290 1,940 1,240 2,260 860 1,400 2,690 4,845 1,290 2,260 700 1,185 970 1,400 755 1,400 1,290 3,500

CUbA USD 3,110 4,340 2,790 4,025 3,110 4,350 2,230 2,970 2,790 4,350 2,230 3,110 N/P N/P N/P N/P 1,615 2,230 N/P N/P

DENVER USD 1,505 2,420 1,075 1,615 860 1,400 700 1,345 1,990 3,015 1,130 1,775 430 755 645 1,025 700 1,185 645 3,765

HONOLULU USD 2,745 5,060 2,315 3,820 1,990 4,735 1,670 4,145 4,950 7,160 3,120 5,220 915 1,345 1,290 2,530 1,345 2,155 1,830 7,320

LAS VEGAS USD 1,505 3,070 1,130 2,045 1,240 5,165 700 1,560 3,500 5,005 1,290 2,420 540 915 645 1,615 540 1,075 755 4,305

LOS ANGELES USD 2,155 3,230 1,505 2,260 1,345 3,015 1,075 1,720 3,230 4,845 2,155 2,960 1,025 1,240 1,185 1,670 1,025 1,720 1,615 3,335

NEW YORK USD 2,205 3,765 1,940 2,905 1,505 2,690 1,240 1,720 3,445 5,115 1,990 2,850 700 1,130 915 1,345 970 1,400 1,505 3,765

PHOENIx USD 1,400 2,585 1,075 1,720 1,130 1,775 755 1,345 2,475 4,305 1,185 1,720 430 700 645 1,075 590 1,075 860 4,305

PORTLAND USD 1,775 2,370 1,240 1,830 1,185 2,370 970 1,400 1,885 2,850 1,400 1,830 755 970 1,075 1,505 805 1,400 1,185 2,800

PUERTO RICO USD 2,650 3,540 2,065 2,950 2,065 2,660 1,185 1,765 3,830 4,715 2,355 2,950 N/P N/P N/P N/P 935 1,420 1,775 2,950

SAN FRANCISCO USD 2,370 3,550 1,720 2,585 1,615 3,015 1,400 1,990 3,230 5,060 2,370 3,120 1,075 1,400 1,290 1,775 1,025 1,720 1,720 3,765

SEATTLE USD 1,775 2,205 1,240 1,720 1,240 2,155 1,025 1,455 1,990 2,960 1,505 1,940 700 915 915 1,345 805 1,185 1,075 2,530

ST LUCIA USD 2,230 3,400 1,635 2,345 1,410 2,110 1,645 2,110 3,285 4,110 2,230 2,830 N/P N/P N/P N/P 830 1,765 2,110 2,940

US VIRGIN ISLANDS USD 2,850 4,155 2,615 3,790 2,250 3,315 1,660 2,370 5,340 6,525 3,565 4,445 N/P N/P N/P N/P 1,660 2,370 2,130 3,315

WASHINGTON D.C. USD 1,885 2,585 1,400 1,990 1,025 2,045 805 1,455 2,475 4,035 1,615 2,475 590 860 805 1,075 755 1,075 1,075 2,690

ASIA ASIA

bEIjING RMb 7,600 12,550 7,100 10,750 8,400 12,850 7,350 11,500 13,000 17,200 9,700 12,450 2,250 3,050 3,750 6,500 4,350 5,450 4,050 6,100

CHENGDU RMb 6,900 11,200 6,350 9,400 7,300 11,050 6,600 10,500 11,550 14,800 8,700 11,000 2,050 2,800 3,650 5,950 3,490 4,300 3,500 5,450

GUANGzHOU RMb 7,300 11,670 6,750 10,200 8,350 11,900 7,200 10,800 13,000 16,750 9,700 11,900 2,150 3,050 3,750 6,500 4,200 5,250 3,850 5,750

HO CHI MINH CITY VND ('000) 23,341 33,572 19,906 24,916 18,836 25,076 N/P N/P 30,351 37,170 22,817 29,518 8,509 12,714 17,499 23,910 5,832 8,830 14,952 22,669

HONG KONG HKD 21,400 31,900 18,600 25,200 21,900 27,900 18,700 24,300 34,100 41,600 28,100 32,400 8,300 9,750 15,600 22,100 14,400 18,200 20,500 35,400

jAKARTA RP ('000) 9,648 13,200 6,670 10,620 6,520 8,515 N/P N/P 13,670 17,420 10,410 11,875 3,460 4,450 4,450 6,190 4,650 5,680 6,430 9,986

KUALA LUMPUR RINGGIT 2,400 4,000 1,300 2,800 2,100 3,500 N/P N/P 4,800 6,500 2,500 3,800 800 1,200 1,400 3,200 1,000 1,700 1,700 4,100

MACAU MOP 17,500 25,200 15,400 21,600 19,100 23,600 16,200 20,800 28,400 35,300 23,700 27,300 N/P N/P 8,650 11,550 N/P N/P 13,200 21,000

MANILA PHP 32,468 44,303 26,197 35,705 27,512 31,659 20,836 23,365 53,507 61,599 43,190 48,854 14,666 16,892 16,083 18,510 17,397 20,533 27,209 48,450

SEOUL KRW ('000) 2,320 2,960 1,740 2,130 1,550 2,250 1,310 1,980 3,110 4,600 2,000 2,550 650 800 840 1,060 1,150 1,460 1,500 2,170

SHANGHAI RMb 7,350 11,900 6,750 10,300 8,150 12,550 7,050 11,300 12,550 16,500 9,300 11,900 2,100 3,050 4,000 6,600 4,100 5,300 3,750 5,800

SHENzHEN RMb 6,900 11,300 6,500 9,850 7,500 11,450 6,600 10,100 12,200 15,900 9,120 11,500 2,050 2,900 3,750 6,350 3,900 4,900 3,650 5,550

SINGAPORE SGD 2,800 4,050 2,150 3,050 2,250 3,500 N/P N/P 4,400 5,800 3,400 3,850 700 1,400 1,500 2,250 1,150 1,650 2,050 3,250

EuROPE EuROPE

AMSTERDAM (NETHERLANDS) EUR 1,300 1,650 950 1,400 750 950 600 800 1,500 1,900 1,200 1,500 400 600 650 1,000 375 525 850 1,350

bERLIN (GERMANY) EUR 1,340 1,754 980 1,135 1,135 1,445 826 1,030 1,960 2,720 1,340 1,750 465 670 774 1,030 362 723 980 1,390

bIRMINGHAM (UK) GbP 1,725 2,430 1,500 2,435 2,645 3,700 840 1,580 2,015 2,750 1,270 1,870 320 635 800 1,375 350 635 1,590 2,230

bRISTOL (UK) GbP 1,920 2,530 1,690 2,530 2,750 3,850 875 1,655 2,285 3,045 1,325 1,765 385 770 875 1,465 365 665 1,655 2,320

bUDAPEST (HUNGARY) EUR 1,200 1,500 920 1,300 1,300 1,800 600 1,200 1,350 1,950 800 1,150 350 500 450 650 400 520 650 950

DUbLIN (IRELAND) EUR 1,800 2,000 1,600 1,800 1,900 2,100 1,000 1,200 2,000 2,200 1,340 1,440 400 500 600 1,000 400 560 1,400 1,600

LONDON (UK) GbP 2,228 2,937 1,874 2,937 3,038 4,253 972 1,823 2,405 3,240 1,620 2,076 390 780 1,013 1,671 421 760 1,874 2,684

MADRID (SPAIN) EUR 825 1,250 640 1,150 1,800 2,500 1,800 2,500 1,950 2,600 1,300 1,590 1,600 1,900 500 700 400 500 500 790

MANCHESTER (UK) GbP 1,815 2,390 1,590 2,390 2,590 3,640 830 1,550 2,000 2,700 1,250 1,690 315 630 830 1,350 350 630 1,570 2,200

MOSCOW (RUSSIA) EUR 1,700 2,000 1,100 1,500 2,000 2,800 900 1,400 2,800 3,500 1,500 2,000 400 550 800 1,100 450 650 1,200 1,700

OSLO (NORWAY) EUR 2,840 3,690 2,190 2,850 1,800 2,340 1,440 1,870 3,920 5,090 2,960 3,850 690 880 890 1,160 1,570 2,030 2,420 3,150

PARIS (FRANCE) EUR 1,295 1,306 2,434 2,745 1,538 2,314 1,198 1,538 4,008 4,436 N/P N/P N/P N/P 880 N/P N/P 2,105 2,338 2,466

PODGORICA (MONTENEGRO) EUR 1,800 1,800 1,200 1,200 1,400 1,400 N/P N/P 2,100 2,100 1,300 1,300 900 900 1,400 1,400 500 500 N/P N/P

SHEFFIELD (UK) GbP 1,770 2,330 1,500 2,380 2,580 3,620 830 1,550 1,960 2,690 1,215 1,620 305 610 810 1,315 330 610 1,520 2,170

VIENNA (AUSTRIA) EUR 1,850 2,325 1,374 1,691 1,797 2,220 1,004 1,163 3,012 3,382 1,691 2,167 529 581 1,163 1,321 581 740 1,480 1,744

mIddLE EAST & AfRICA mIddLE EAST & AfRICA

AbU DHAbI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P 9,000 12,000 6,000 8,500 1,800 3,600 2,850 4,500 1,500 2,700 4,500 6,500

DUbAI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P 9,500 13,000 6,000 8,500 2,300 3,600 3,100 4,500 1,800 3,400 4,500 6,500

RIYADH SAR 4,890 7,597 4,991 6,825 4,728 6,198 3,361 4,728 8,304 10,110 5,989 7,465 920 1,220 2,265 2,845 3,312 4,046 4,576 9,647

DOHA QAR 6,500 8,500 6,100 8,200 5,300 6,500 N/P N/P 11,500 14,500 7,500 8,500 N/P N/P 2,750 4,500 N/P N/P 6,500 7,800

OCEANIA OCEANIA

ADELAIDE AUD 2,600 3,850 2,100 3,250 1,550 2,850 1,300 1,825 3,500 4,400 2,500 3,400 580 900 1,300 1,900 625 1,100 2,350 3,550

AUCKLAND NzD 2,800 4,000 2,400 3,600 1,800 2,300 1,200 1,800 3,600 4,000 2,900 3,350 600 850 1,300 1,800 500 750 2,800 3,600

bRISbANE AUD 2,450 3,800 1,900 2,900 2,150 2,950 1,050 1,550 3,200 4,800 2,500 3,600 700 1,000 1,500 2,000 600 1,000 1,900 3,050

CANbERRA AUD 3,070 3,980 2,490 3,140 2,110 2,960 1,130 1,860 3,780 4,660 2,750 3,840 700 970 940 1,340 650 1,010 2,550 3,700

CHRISTCHURCH NzD 3,600 4,700 3,100 4,100 1,600 2,100 N/P N/P 3,600 4,200 2,900 3,300 850 1,300 1,700 2,100 720 1,100 N/P N/P

DARWIN AUD 3,000 4,050 2,300 3,700 1,650 2,500 1,100 1,950 3,550 4,400 2,800 3,500 750 1,250 1,150 1,500 750 1,375 2,010 2,600

MELbOURNE AUD 3,000 3,750 2,325 2,900 2,025 3,000 1,060 1,550 3,450 4,500 3,050 3,500 655 1,060 1,110 1,365 555 1,100 2,200 3,500

PERTH AUD 3,150 4,770 2,575 3,740 2,300 2,800 1,025 2,565 3,600 4,430 2,645 3,635 750 1,000 1,850 3,100 625 1,020 2,230 3,830

SYDNEY AUD 3,100 4,350 2,300 3,250 1,700 3,550 1,350 1,700 3,850 5,050 2,750 3,450 650 1,000 950 1,520 640 990 2,250 4,100

WELLINGTON NzD 2,940 3,360 2,310 2,625 1,300 1,800 N/P N/P 3,400 4,100 2,310 2,730 500 900 1,890 2,730 900 1,400 2,625 3,360

N/P: NOT PUbLISHED

The following data represents estimates of current building costs in the respective market. Costs may vary as a

consequence of factors such as site conditions, climatic conditions, standards of specification, market conditions etc.

MARKET DATAINTERNATIONAL CONSTRuCTION RATES


RANgE Of COST PER m2 Of gROSS fLOOR AREA RANgE Of COST PER m2 Of gROSS fLOOR AREA

OffICE BuILdINg RETAIL HOTELS CAR PARKINg INduSTRIAL WAREHOuSE

RESIdENTIAL muLTI STOREyLOCAL

CuRRENCyPREmIum OffICES gRAdE A mALL STRIP SHOPPINg 5 STAR 3 STAR muLTI STOREy BASEmENT

LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH LOW HIgH

AmERICAS AmERICAS

bAHAMAS USD 2,495 4,455 2,335 3,270 1,635 2,830 1,520 2,390 2,725 7,070 1,530 4,885 N/P N/P N/P N/P 1,410 2,280 1,410 4,565

bARbADOS USD 2,270 3,790 2,055 3,250 1,745 2,700 1,520 2,380 2,595 4,325 1,735 2,700 N/P N/P N/P N/P 700 2,000 3,025 4,325

bERMUDA USD 3,540 4,715 3,305 4,480 2,950 3,765 2,605 3,425 3,540 4,715 2,950 3,540 N/P N/P N/P N/P 2,355 2,990 3,055 4,715

bOSTON USD 2,155 3,015 1,885 2,635 1,290 2,260 970 1,560 2,690 4,305 1,720 2,690 645 970 860 1,185 755 1,075 1,455 3,500

bRITISH VIRGIN ISLANDS USD 2,915 3,025 2,540 3,735 2,110 3,510 1,755 2,335 4,670 6,425 2,915 4,090 N/P N/P N/P N/P 1,130 2,215 2,100 3,270

CAYMAN ISLANDS USD 2,810 4,110 2,595 3,790 2,700 3,680 2,380 3,250 2,915 3,790 2,485 3,465 N/P N/P N/P N/P 1,840 2,915 2,215 3,565

CHICAGO USD 2,475 3,875 1,290 1,940 1,240 2,260 860 1,400 2,690 4,845 1,290 2,260 700 1,185 970 1,400 755 1,400 1,290 3,500

CUbA USD 3,110 4,340 2,790 4,025 3,110 4,350 2,230 2,970 2,790 4,350 2,230 3,110 N/P N/P N/P N/P 1,615 2,230 N/P N/P

DENVER USD 1,505 2,420 1,075 1,615 860 1,400 700 1,345 1,990 3,015 1,130 1,775 430 755 645 1,025 700 1,185 645 3,765

HONOLULU USD 2,745 5,060 2,315 3,820 1,990 4,735 1,670 4,145 4,950 7,160 3,120 5,220 915 1,345 1,290 2,530 1,345 2,155 1,830 7,320

LAS VEGAS USD 1,505 3,070 1,130 2,045 1,240 5,165 700 1,560 3,500 5,005 1,290 2,420 540 915 645 1,615 540 1,075 755 4,305

LOS ANGELES USD 2,155 3,230 1,505 2,260 1,345 3,015 1,075 1,720 3,230 4,845 2,155 2,960 1,025 1,240 1,185 1,670 1,025 1,720 1,615 3,335

NEW YORK USD 2,205 3,765 1,940 2,905 1,505 2,690 1,240 1,720 3,445 5,115 1,990 2,850 700 1,130 915 1,345 970 1,400 1,505 3,765

PHOENIx USD 1,400 2,585 1,075 1,720 1,130 1,775 755 1,345 2,475 4,305 1,185 1,720 430 700 645 1,075 590 1,075 860 4,305

PORTLAND USD 1,775 2,370 1,240 1,830 1,185 2,370 970 1,400 1,885 2,850 1,400 1,830 755 970 1,075 1,505 805 1,400 1,185 2,800

PUERTO RICO USD 2,650 3,540 2,065 2,950 2,065 2,660 1,185 1,765 3,830 4,715 2,355 2,950 N/P N/P N/P N/P 935 1,420 1,775 2,950

SAN FRANCISCO USD 2,370 3,550 1,720 2,585 1,615 3,015 1,400 1,990 3,230 5,060 2,370 3,120 1,075 1,400 1,290 1,775 1,025 1,720 1,720 3,765

SEATTLE USD 1,775 2,205 1,240 1,720 1,240 2,155 1,025 1,455 1,990 2,960 1,505 1,940 700 915 915 1,345 805 1,185 1,075 2,530

ST LUCIA USD 2,230 3,400 1,635 2,345 1,410 2,110 1,645 2,110 3,285 4,110 2,230 2,830 N/P N/P N/P N/P 830 1,765 2,110 2,940

US VIRGIN ISLANDS USD 2,850 4,155 2,615 3,790 2,250 3,315 1,660 2,370 5,340 6,525 3,565 4,445 N/P N/P N/P N/P 1,660 2,370 2,130 3,315

WASHINGTON D.C. USD 1,885 2,585 1,400 1,990 1,025 2,045 805 1,455 2,475 4,035 1,615 2,475 590 860 805 1,075 755 1,075 1,075 2,690

ASIA ASIA

bEIjING RMb 7,600 12,550 7,100 10,750 8,400 12,850 7,350 11,500 13,000 17,200 9,700 12,450 2,250 3,050 3,750 6,500 4,350 5,450 4,050 6,100

CHENGDU RMb 6,900 11,200 6,350 9,400 7,300 11,050 6,600 10,500 11,550 14,800 8,700 11,000 2,050 2,800 3,650 5,950 3,490 4,300 3,500 5,450

GUANGzHOU RMb 7,300 11,670 6,750 10,200 8,350 11,900 7,200 10,800 13,000 16,750 9,700 11,900 2,150 3,050 3,750 6,500 4,200 5,250 3,850 5,750

HO CHI MINH CITY VND ('000) 23,341 33,572 19,906 24,916 18,836 25,076 N/P N/P 30,351 37,170 22,817 29,518 8,509 12,714 17,499 23,910 5,832 8,830 14,952 22,669

HONG KONG HKD 21,400 31,900 18,600 25,200 21,900 27,900 18,700 24,300 34,100 41,600 28,100 32,400 8,300 9,750 15,600 22,100 14,400 18,200 20,500 35,400

jAKARTA RP ('000) 9,648 13,200 6,670 10,620 6,520 8,515 N/P N/P 13,670 17,420 10,410 11,875 3,460 4,450 4,450 6,190 4,650 5,680 6,430 9,986

KUALA LUMPUR RINGGIT 2,400 4,000 1,300 2,800 2,100 3,500 N/P N/P 4,800 6,500 2,500 3,800 800 1,200 1,400 3,200 1,000 1,700 1,700 4,100

MACAU MOP 17,500 25,200 15,400 21,600 19,100 23,600 16,200 20,800 28,400 35,300 23,700 27,300 N/P N/P 8,650 11,550 N/P N/P 13,200 21,000

MANILA PHP 32,468 44,303 26,197 35,705 27,512 31,659 20,836 23,365 53,507 61,599 43,190 48,854 14,666 16,892 16,083 18,510 17,397 20,533 27,209 48,450

SEOUL KRW ('000) 2,320 2,960 1,740 2,130 1,550 2,250 1,310 1,980 3,110 4,600 2,000 2,550 650 800 840 1,060 1,150 1,460 1,500 2,170

SHANGHAI RMb 7,350 11,900 6,750 10,300 8,150 12,550 7,050 11,300 12,550 16,500 9,300 11,900 2,100 3,050 4,000 6,600 4,100 5,300 3,750 5,800

SHENzHEN RMb 6,900 11,300 6,500 9,850 7,500 11,450 6,600 10,100 12,200 15,900 9,120 11,500 2,050 2,900 3,750 6,350 3,900 4,900 3,650 5,550

SINGAPORE SGD 2,800 4,050 2,150 3,050 2,250 3,500 N/P N/P 4,400 5,800 3,400 3,850 700 1,400 1,500 2,250 1,150 1,650 2,050 3,250

EuROPE EuROPE

AMSTERDAM (NETHERLANDS) EUR 1,300 1,650 950 1,400 750 950 600 800 1,500 1,900 1,200 1,500 400 600 650 1,000 375 525 850 1,350

bERLIN (GERMANY) EUR 1,340 1,754 980 1,135 1,135 1,445 826 1,030 1,960 2,720 1,340 1,750 465 670 774 1,030 362 723 980 1,390

bIRMINGHAM (UK) GbP 1,725 2,430 1,500 2,435 2,645 3,700 840 1,580 2,015 2,750 1,270 1,870 320 635 800 1,375 350 635 1,590 2,230

bRISTOL (UK) GbP 1,920 2,530 1,690 2,530 2,750 3,850 875 1,655 2,285 3,045 1,325 1,765 385 770 875 1,465 365 665 1,655 2,320

bUDAPEST (HUNGARY) EUR 1,200 1,500 920 1,300 1,300 1,800 600 1,200 1,350 1,950 800 1,150 350 500 450 650 400 520 650 950

DUbLIN (IRELAND) EUR 1,800 2,000 1,600 1,800 1,900 2,100 1,000 1,200 2,000 2,200 1,340 1,440 400 500 600 1,000 400 560 1,400 1,600

LONDON (UK) GbP 2,228 2,937 1,874 2,937 3,038 4,253 972 1,823 2,405 3,240 1,620 2,076 390 780 1,013 1,671 421 760 1,874 2,684

MADRID (SPAIN) EUR 825 1,250 640 1,150 1,800 2,500 1,800 2,500 1,950 2,600 1,300 1,590 1,600 1,900 500 700 400 500 500 790

MANCHESTER (UK) GbP 1,815 2,390 1,590 2,390 2,590 3,640 830 1,550 2,000 2,700 1,250 1,690 315 630 830 1,350 350 630 1,570 2,200

MOSCOW (RUSSIA) EUR 1,700 2,000 1,100 1,500 2,000 2,800 900 1,400 2,800 3,500 1,500 2,000 400 550 800 1,100 450 650 1,200 1,700

OSLO (NORWAY) EUR 2,840 3,690 2,190 2,850 1,800 2,340 1,440 1,870 3,920 5,090 2,960 3,850 690 880 890 1,160 1,570 2,030 2,420 3,150

PARIS (FRANCE) EUR 1,295 1,306 2,434 2,745 1,538 2,314 1,198 1,538 4,008 4,436 N/P N/P N/P N/P 880 N/P N/P 2,105 2,338 2,466

PODGORICA (MONTENEGRO) EUR 1,800 1,800 1,200 1,200 1,400 1,400 N/P N/P 2,100 2,100 1,300 1,300 900 900 1,400 1,400 500 500 N/P N/P

SHEFFIELD (UK) GbP 1,770 2,330 1,500 2,380 2,580 3,620 830 1,550 1,960 2,690 1,215 1,620 305 610 810 1,315 330 610 1,520 2,170

VIENNA (AUSTRIA) EUR 1,850 2,325 1,374 1,691 1,797 2,220 1,004 1,163 3,012 3,382 1,691 2,167 529 581 1,163 1,321 581 740 1,480 1,744

mIddLE EAST & AfRICA mIddLE EAST & AfRICA

AbU DHAbI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P 9,000 12,000 6,000 8,500 1,800 3,600 2,850 4,500 1,500 2,700 4,500 6,500

DUbAI AED 5,800 7,000 4,700 6,600 4,100 6,500 N/P N/P 9,500 13,000 6,000 8,500 2,300 3,600 3,100 4,500 1,800 3,400 4,500 6,500

RIYADH SAR 4,890 7,597 4,991 6,825 4,728 6,198 3,361 4,728 8,304 10,110 5,989 7,465 920 1,220 2,265 2,845 3,312 4,046 4,576 9,647

DOHA QAR 6,500 8,500 6,100 8,200 5,300 6,500 N/P N/P 11,500 14,500 7,500 8,500 N/P N/P 2,750 4,500 N/P N/P 6,500 7,800

OCEANIA OCEANIA

ADELAIDE AUD 2,600 3,850 2,100 3,250 1,550 2,850 1,300 1,825 3,500 4,400 2,500 3,400 580 900 1,300 1,900 625 1,100 2,350 3,550

AUCKLAND NzD 2,800 4,000 2,400 3,600 1,800 2,300 1,200 1,800 3,600 4,000 2,900 3,350 600 850 1,300 1,800 500 750 2,800 3,600

bRISbANE AUD 2,450 3,800 1,900 2,900 2,150 2,950 1,050 1,550 3,200 4,800 2,500 3,600 700 1,000 1,500 2,000 600 1,000 1,900 3,050

CANbERRA AUD 3,070 3,980 2,490 3,140 2,110 2,960 1,130 1,860 3,780 4,660 2,750 3,840 700 970 940 1,340 650 1,010 2,550 3,700

CHRISTCHURCH NzD 3,600 4,700 3,100 4,100 1,600 2,100 N/P N/P 3,600 4,200 2,900 3,300 850 1,300 1,700 2,100 720 1,100 N/P N/P

DARWIN AUD 3,000 4,050 2,300 3,700 1,650 2,500 1,100 1,950 3,550 4,400 2,800 3,500 750 1,250 1,150 1,500 750 1,375 2,010 2,600

MELbOURNE AUD 3,000 3,750 2,325 2,900 2,025 3,000 1,060 1,550 3,450 4,500 3,050 3,500 655 1,060 1,110 1,365 555 1,100 2,200 3,500

PERTH AUD 3,150 4,770 2,575 3,740 2,300 2,800 1,025 2,565 3,600 4,430 2,645 3,635 750 1,000 1,850 3,100 625 1,020 2,230 3,830

SYDNEY AUD 3,100 4,350 2,300 3,250 1,700 3,550 1,350 1,700 3,850 5,050 2,750 3,450 650 1,000 950 1,520 640 990 2,250 4,100

WELLINGTON NzD 2,940 3,360 2,310 2,625 1,300 1,800 N/P N/P 3,400 4,100 2,310 2,730 500 900 1,890 2,730 900 1,400 2,625 3,360

MARKET DATAINTERNATIONAL CONSTRuCTION RATES Rates are in national currency per square metre of Gross Floor Area except as follows:

Chinese cities, Hong Kong and Macau: Rates are per square metre of Construction Floor Area, measured to outer face of external walls.

Singapore, Ho Chi Minh City, Jakarta and Kuala Lumpur: Rates are per square metre of Construction Floor Area, measured to outer face of external walls and inclusive of covered basement and above ground parking areas.

Chinese cities, Hong Kong, Kuala Lumpur, Macau and Singapore: All hotel rates are inclusive of Furniture Fittings and Equipment (FF&E).

Menlyn Maine Mixed Use Green Precinct, Pretoria, Africa

Architect: Boogertman + Partners


MARKET INTELLIGENCE

SUb- SAHARAN AFRICASub-Saharan Africa’s positive outlook reported in Q3 2014 has seen 2014 GDP growth at 4.5% up slightly from the 4.2% reported in 2013. Public infrastructure developments have been a large factor in growth across the region with significant investment in transport, electricity and ports. Notwithstanding the recent decline in copper prices and the ongoing decline in oil prices, the forecast growth for 2015 is expected to be steady at 4.6%. Whilst the decline in commodity prices will impact on exports, it is unlikely to reduce growth in the short term due to the strength of ongoing infrastructure investment and agricultural expansion.

Despite particular regions facing socio-political risks associated with poverty remaining high, conflict (South Sudan, Central African Republic) and the continuing Ebola outbreak (West Africa), the region remains one of the fastest growing globally.

During 2014, growth in excess of 6% has been seen in Mozambique, Rwanda, Nigeria, Ethiopia, Cote d’lvoire, Democratic Republic of Congo and burkina Faso. Other countries such as Cabo Verde, Guinea-bissau and Guinea recorded the lowest with 2.1%, 2.1% and 0.5% respectively.

Construction within the region is increasing due to increased public investment in infrastructure as a result of increasing mineral exports, renewal of aging infrastructure and an ever increasing services sector. The capacity to maintain and operate this infrastructure expansion is highlighting the need for long term financial management reforms in a number of countries. These reforms are focussed on the strengthening of transparency and accountability in the use of public resources.

2015 fORECASTEd gdP gROWTH

COuNTRy 2014% 2015% 2016%

ANGOLA 3.94 5.92 6.16

bENIN 5.48 5.20 4.80

bOTSWANA 4.35 4.18 4.05

bURKINA FASO 6.66 6.81 7.02

bURUNDI 4.74 4.80 5.01

CAbO VERDE 1.02 3.02 4.04

CAMEROON 5.08 5.19 5.27

CENTRAL AFRICAN REP. 1.01 5.29 5.70

CHAD 9.64 6.72 9.72

COMOROS 3.92 3.93 3.94

CONGO, DEM. REP. OF 8.63 8.49 7.90

CONGO, REP. OF 6.00 7.47 7.29

CôTE D'IVOIRE 8.50 7.90 7.75

EQUATORIAL GUINEA (2.54) (7.87) 1.31

ERITREA 2.02 2.14 2.01

ETHIOPIA 8.20 8.46 8.47

GAbON 5.12 5.39 6.01

GAMbIA, THE 7.37 7.00 5.53

GHANA 4.47 4.69 7.18

GUINEA 2.45 4.08 4.99

GUINEA-bISSAU 2.63 4.00 3.70

KENYA 5.34 6.16 6.38

LESOTHO 4.30 4.68 4.97

LIbERIA 2.49 4.47 10.88

MADAGASCAR 3.05 3.98 4.53

MALAWI 5.70 5.97 5.50

MALI 5.92 4.79 5.09

MAURITIUS 3.32 3.95 4.14

MOzAMbIQUE 8.34 8.16 8.23

NAMIbIA 4.31 4.49 4.57

NIGER 6.33 4.91 5.69

NIGERIA 6.97 7.28 7.18

RWANDA 5.96 6.67 7.50

SãO TOMé & PRíNCIPE 5.00 5.50 5.50

SENEGAL 4.55 4.65 5.07

SEYCHELLES 3.67 3.77 3.65

SIERRA LEONE 8.00 9.91 7.81

SOUTH AFRICA 1.40 2.30 2.80

SOUTH SUDAN (12.25) 18.96 10.28

SWAzILAND 2.11 2.03 2.07

TANzANIA 7.21 7.02 7.13

TOGO 5.65 5.66 5.84

UGANDA 5.91 6.28 6.50

zAMbIA 6.47 7.17 7.72

RLB CONSTRuCTION mARKET ACTIvITy mOdELAfRICA - gROWTH SECTORS vS dECLINE SECTORS

NUMBER OF CITIES

3

1

2

0

4

5

6

GROWTH DECLINE


LOCATION INTELLIGENCEAfRICA


CAPE TOWNThe Cape Town property and

construction industry is in the midst

of a significant recovery. The sector

is however showing signs of a lack

of capacity ranging from property

consultants, principal building

contractors and subcontractors. This

is being attributed to the learnings

of the past decade where the

market has over promised and under

delivered. This has resulted in the

contractors and subcontractors, with

the required capabilities, being more

circumspect in their pricing and risk

acceptance, thereby driving up the

cost of building.

While building costs are increasing,

end user demand is still lagging,

resulting in low yields for developers

and investors together with the

potential of higher vacancies for

prospective developments. Despite

this, the overall trend is a positive one

of recovery.

Current projects include:

• V&A Waterfront - ongoing

development - various projects and

sectors

• Cape Town International

Convention Centre (CTICC) Phase II

• Netcare Hospital (Cape Town

Foreshore)

• Century City ongoing development

- various projects and sectors

• Cape Town CBD various tall

building site

Steel reinforcement and structural

steel remains a highly volatile trade

in the Western Cape. This is more

pronounced with structural steel and

continues to inhibit the growth of

fast tracked steel construction with

current pricing trends continuing

to favour in situ concrete framed

structures.

HVAC is characterised by a shortage

of large subcontractors capable of

high specification HVAC installations.

Aluminium doors, windows and

shopfronts has seen a number of

established subcontractors close their

doors in the midst of the recession

leaving a capability shortage. This has

affected the standard of commercial

and residential projects. There has

been an increase in capability of flush

glazed facade contractors.

Given the waning capacity and

the general increase in margins,

opportunities to negotiate contracts

rather than tender are being pursued

throughout the industry.

JOHANNESBuRg

Despite high office vacancies, rental

growth in office nodes around

Johannesburg are still growing at

levels higher than current inflation

levels. The areas around the new

Gautrain stations, Sandton &

Rosebank, are showing strong signs

of growth, being very popular among

developers. The manufacturing sector

remains challenged and the demand

for industrial space is still low.

Positive growth is continuing in the

retail sector, with new centres being

built in previously disadvantaged

towns and the refurbishment of

existing centres in established areas

like Menlyn and Sandton.

Current significant projects underway

include Discovery’s Head Office

within the Sandton’s commercial

node. The landmark building consists

of 9 basement levels with 6,000

parking bays and a 9 level office

building with a gross building area of

100,000m2. The total gross building

area is 300,000m2. The development

is expected to house 5,000 people.

The total development cost is

forecast to cost R 3billion and to be

completed in October 2017.

A new Head Office for Sasol

Petrochemicals Company is being

constructed also in Sandton. With an

office area of 67,000m2, the 10 level

building and seven level basement,

will house up to 4,000 employees.

The 5 star Greenstar development

commenced in 2013 and is due for

completion in late 2016.

The current weakness in the Rand

could potentially make South

African goods more competitive

internationally, and could give the

industrial sector more impetus. Lower

fuel costs and stable food prices will

give households more disposable

income which bodes well for all

sectors.

Location inteLLigenceAFRICA


mAPuTO (mOZAmBIQuE)

Mozambique is currently experiencing

major economic uplift and positive

prospects for the foreseeable future.

Offshore gas was recently discovered

in northern Mozambique, which

amounts to the second largest found

in the world (with Qatar the largest)

with reserves estimated to be 170

trillion cubic feet CF. With this find,

major infrastructure requirements

have come to the forefront of the

country's construction activity.

Residential villages, offices, medical

facilities, schools, retail and

engineering facilities will be required

in large quantities once the physical

extraction of the gas starts in the

near future.

Current key projects include The

Horizon in Maputo. This project is

currently the largest commercial

development in the city. The

development consists of four car

parking decks of 24,000m2, a 14 level

office tower of 15 000m2, and a 193

key, 18 level residential tower. The

project totals an estimated GCA of

74,000m2.

The Pemba Mixed use Development

in Pemba (Northern Mozambique) is

a mixed use project, comprising of

two construction phases. Phase one

comprises a 10,000m2 multi tenanted

retail centre (strip mall) and 2,500m2

multi-tenanted office block (ground

+ 1). The first phase is expected to

be completed by March 2016. Phase

two will comprise a further 10 000m2

multi tenanted retail centre (strip

mall) and 2 multi tenanted office

blocks of 2,500m2 each (ground +1).

The bulk of projects in Mozambique

are US dollar based projects.

The price of steel reinforcing

fluctuates regularly due to the

metals union strikes that have led to

shortages and has put pressure on

the prices of steel. Structural steel

prices have also increased regularly

by 2%-5%.

PORT LOuIS (mAuRITIuS)The district of Moka, situated in the

centre of the island, has witnessed

significant growth in terms of

infrastructure works and property

development during the past 5

years. The St Pierre region and

Bagatelle areas have witnessed the

most development activity. Strong

investment has been seen in road

infrastructure within the district. Due

the increased access, strong growth

in development has been seen with

new retail outlets, real estate projects

and business centres being built.

Major developments include the

Mall of Mauritius – Bagatelle,

Mauritius’s leading shopping and

retail destination. During the course

of 2014, two major shops in the mall,

namely Woolworths and Cash & Carry

have undergone further extension

due to an increase in business

activity.

Phase 1 of the Bagatelle Motorcity

was completed in October 2014.

This new development aims to be

the destination for car and new

technology enthusiasts. When

completed the development will

accommodate showrooms for car

dealers, bikes and motorcycles and

workshops for car sound fitments,

tyres and windscreens. Phase 1 of

the project consisted of two retail

blocks and the majority of the site’s

infrastructure works.

Mauritius’s impact from the GFC

was delayed by more than three

years. The local construction market

started to feel the effects of the crisis

towards the end of the year 2012,

with the impact escalating in 2013

and 2014. However, in the second

half of 2014, the industry has started

to recover. Activity in the sector has

strengthened and it is expected to

improve during 2015 and 2016. The

local authorities are hopeful more

investment will follow and new

developments will help the industry

grow in the next coming years.

PRETORIAThe construction economy for the

region (Gauteng) is showing positive

signs. The majority of current

construction projects within the

region are private sector owned

while the Government is investing in

the majority of the civil engineering

works.

The construction industry’s focus

has shifted slightly, over the past few

years, to be more aligned with the

global perspective. In order to attract

foreign investment, the standards

have been raised to satisfy the needs

of potential investors while staying

true to the country’s environmental

responsibilities.

Currently the biggest construction

activity in Pretoria is around the

Menlyn area where Menlyn Maine

is the focus point constructing the

first "green city" in Africa. This Mega

development will comprise a total

of 315,000m2 of Gross Lettable Area

including:

• 140,000m2 of Commercial Office

space,

• 35,000m2 of Retail, Dining and

Shopping space,

• 4,000m2 Virgin Active Classic Gym,

• 85,000m2 of Up-market Residential

Apartments

• 18,000m2 of Luxury Hotel space,

• 60,000m2 Time Square Urban

Entertainment Complex.

• 5,700m2 of Scenic parklands.

Existing buildings are being upgraded

and others demolished to make way

for new developments in the Hatfield

area. Commercial developments

under construction include new

government office accommodation

for Stats SA, Agrivaal and Munitoria.

Arizona State University Polytechnic Campus Sun Devil Fitness Complex, Mesa, United States of America

Architect: Architekton and 360 Architecture

Photographs provided by Dror Baldinger, AIA Architecture Photography


The effect of falling oil prices and the strengthening dollar in the US is not yet showing in published figures. GDP growth continues to rise with growth forecasted to be 2.4% for 2014 and 3.1% for 2015. The overall impact on economic growth of the fall on oil prices is probably positive, although it may slow growth in the mining sector.

The U.S. economy is growing at an above trend pace, in part with strong jobs growth. The construction industry is showing stronger indicators with job gains during 2014. july construction spending was at its highest that it had been since December 2008. The US Department of Commerce reported a total of US$981 billion for july 2014 up 8.2% on the previous july. Despite a decline in highway spending in in both August and September other sectors within construction were on the rise, however November saw increases in residential, but slight declines across other sectors reducing total construction spending for the quarter.

With lower unemployment, wages growth and positive sentiments across most sections of the economy, there has been an increase in new home sales as well, with a spike in August 2014 up 18%

MARKET INTELLIGENCE

AMERICASon july. Showing all sections of the construction industry have performed well for 2014, this may continue if current requests for increased infrastructure spending are answered with funds.

While there are signs wages growth is starting to strengthen, with oil prices falling and the dollar strengthening, low inflation remains the main risk that may delay rate hikes. business and consumer surveys are generally positive.

Within South America, regional economic growth is forecasted to accelerate in 2015-16 following a relatively weak year. The brazilian economy will remain fragile. Mexico remains at the centre of development potential. Manufacturing (primarily autos), energy, telecommunication, and utilities are key sectors for further integration within the North American landscape through the North American Free Trade Agreement (NAFTA) .The Pacific Alliance countries (Mexico, Colombia, Chile and Peru) are forecasted to grow by 4% in 2015-16. both Peru and Colombia will likely recover fastest. An expanded Panama Canal will boost regional trade flows and deepen economic ties from 2016 onwards.

uSA CONSTRuCTION COST RELATIvITIES

Q1, 2015

NEW YORK 180

HONOLULU 174

bOSTON 152

SAN FRANCISCO 151

CHICAGO 147

WASHINGTON 143

LOS ANGELES 136

SEATTLE 117

PORTLAND 106

PHOENIx 101

DENVER 100

LAS VEGAS 98

NUMBER OF CITIES

15

5

0

10

20

30

25

GROWTH DECLINE


RLB CONSTRuCTION mARKET ACTIvITy mOdEL THE AmERICAS - gROWTH SECTORS vS dECLINE SECTORS


COuNTRy 2014% 2015% 2016%

NORTH AmERICA

CANADA 2.27 2.45 2.36

MExICO 2.39 3.53 3.77

UNITED STATES 2.15 3.09 3.03

SOuTH AmERICA

ARGENTINA (1.70) (1.50) --

bOLIVIA 5.20 5.00 5.00

bRAzIL 0.30 1.39 2.23

CHILE 2.00 3.34 4.00

COLOMbIA 4.81 4.53 4.52

ECUADOR 4.00 4.00 4.00

GUYANA 3.32 3.83 4.85

PARAGUAY 4.00 4.50 4.50

PERU 3.60 5.12 5.47

SURINAME 3.26 3.78 4.23

URUGUAY 2.80 2.80 3.00

VENEzUELA (3.00) (1.00) 0.01

CENTRAL AmERICA

bELIzE 2.00 2.50 2.50

COSTA RICA 3.60 3.60 4.20

EL SALVADOR 1.70 1.80 1.80

GUATEMALA 3.40 3.70 3.60

HONDURAS 3.00 3.10 3.20

NICARAGUA 4.00 4.00 4.00

PANAMA 6.61 6.44 6.69

THE CARIBBEAN

ANTIGUA AND bARbUDA

1.86 1.73 2.00

THE bAHAMAS 1.20 2.10 2.00

bARbADOS (0.55) 0.55 1.51

DOMINICA 1.43 1.24 1.23

DOMINICAN REPUbLIC 5.30 4.20 4.00

GRENADA 1.11 1.20 1.70

HAITI 3.75 3.70 3.99

jAMAICA 1.05 1.78 2.23

ST. KITTS AND NEVIS 3.54 3.16 3.24

ST. LUCIA (1.11) 1.39 1.44

ST. VINCENT AND THE GRENADINES

1.66 2.57 3.05

TRINIDAD AND TObAGO

2.34 2.09 1.86

LOCATION INTELLIGENCEAmERICAS


AMERICASdENvERThe strengthening Denver economy

continues to provide new jobs

through most industry sectors.

From an unemployment rate of 9%

during the Global Financial Crisis, it is

expected to be as low as 5% in 2014

and perhaps lower in 2015.

Colorado boasts the sixth fastest

growth in GDP nationally and

remains as one of the nation’s

most desirable places to reside and

establish a business. This economic

growth, while overall being a

positive characteristic, is increasingly

stretching the resources within the

construction industry and sending

worrying signals regarding the

inevitable increase in the price of

construction due to the availability of

skilled labour to satisfy the volume of

work in the industry

The completion of Denver’s Union

Station development project,

reinstating it as the regional

transportation hub, has made the

LoDo (Lower Downtown) area one of

the most sought after office locations

in the nation. Two new office towers

are set to break ground in 2015 which

is certain to encourage development

of other speculative ventures.

The boom in marijuana grow houses

appears to have settled down for

now although it will most likely

continue to be a significant part

of the construction industry as the

fledgling industry finds its feet.

Single-family construction has been

fairly flat in 2014 to match a decrease

in demand. The forecast for 2015 is

that this market sector will pick up a

little but only with a 2 to 3% increase.

During the latter part of 2014

Colorado experienced increases in

construction costs at rates far greater

than the previous years. Our cost

index suggests cost escalation will

be recorded at between 4 and 5%

for the year. Statutory wage rate

increases have been rather modest

as has material supply process

but the increase in the volume of

construction in the marketplace has

led to labour shortages in several key

sub-trades. It is very likely volume of

construction will continue to grow

and is expected that the cost of in-

place construction will rise further in

2015 as subcontractor resources fail

to meet demand resulting in reduced

competition.

CARIbbEANBAHAmASThe economy is expected to have

grown by 1.2% in 2014, according to

the IMF, against an earlier forecast of

2.3%, but up on the 0.7% achieved in

2013 and 1% in 2012. Tourism activity

has softened and the momentum

remains weak.

Led by the ongoing Baha Mar project,

government figures show that the

non-residential construction sector

has been booming in the Bahamas,

growing by 21% in 2013, and there

are expectations that tourism-related

construction will continue to support

economic output. This will be helped

by the completion of the $400

million renovation and expansion of

Lynden Pindling International Airport,

although the Bahamian Contractors

Association (BCA) is seeking

legislation to revive the stagnant local

construction sector.

Scheduled to open in December 2014,

the US$3.5 billion Baha Mar project

will include four hotels as well as a

200,000 sq. ft. convention centre,

an 18-hole Jack Nicklaus Signature

Golf Course and a casino. Located

at Cable Beach, it has been heavily

backed by the Chinese in terms of

financing and providing the general

contractor. Nearby, the US$35 million

Towers Shopping Centre will provide

64,000 sq. ft. of retail space, while

another potential project is the

development of the Abaco Club at

Winding Bay into a major residential

scheme.

Location inteLLigenceAMERICAS


BARBAdOSBarbados’s economy is still failing to

show signs of growth in the face of

rising government debt (up to 80%

of GDP in March 2014), with the 1%

decline in 2013 likely to be repeated

in 2014 before a small recovery in

2015.

The tourism sector has a litany

of woes ranging from effects of

a recessionary economy, visitor

security, to declining arrivals and

low spending, but sees current

investments as the bright spot.

The real estate market has shown

signs of picking up in 2014 after six

years of sluggish activity, particularly

for luxury homes, with the premium

west coast from Bridgetown to

Speightstown being especially

popular. This has not yet translated

into rising prices.

There are several planned

developments. These include the

decision by international brand,

Sandals, to purchase and renovate

the landmark tourism property,

Almond Beach Resort, at a cost of

US$125 million. Sandals already has

another property – the Casuarina-

under renovation, while a takeover

of Amaryllis is set for the renovation

and the purchase of Four Seasons.

Sandy Beach is being converted into

a condo hotel and there is planned

development for Settler’s Beach.

CAymAN ISLANdSThe growth in the Cayman Islands’

economy is expected to remain in

the 1-2% range for the third year in

succession in 2014, with 1.9% forecast.

The planned Ironwood community

is a US$360 million mixed-use

development, located on the East

End of the island of Grand Cayman.

It will include an Arnold Palmer

signature golf course, a Town Centre

with shops and a vacation resort.

Having opened a US$40 million,

112-bed care hospital in Grand

Cayman in 2014 within a 12 month

construction schedule, DeAngelis

Diamond Healthcare Group has plans

to expand to a 2,000 bed facility over

the next decade at Health City.

Developer Dart Realty is developing

Camana Bay as a major hotel/

tourism destination. The plans are

for a resort village connecting Seven

Mile Beach to the current mixed-use

town centre. Additional office space

is under construction. Another of

their developments is the 263-room

Kimpton-branded Seven Mile Beach

Hotel with 56 residences, a US$200

million project in Grand Cayman.

ST LuCIASaint Lucia is a high-income country

with a very small-sized economy.

According to the World Bank, GDP

fell by 0.9% in 2013 but is forecast to

grow by 0.9% in 2014, followed by

2-2.5% growth in both 2015 and 2016.

Following the lead taken by a number

of other islands in the Caribbean,

the government is considering

the establishment of an economic

citizenship programme as a new area

of investment.

The government is also providing a

boost to the construction sector with

new and on-going projects in 2014-

15. The industry is heavily reliant on

infrastructure developments within

both the public and private sectors

and is a major employer. Projects

include the reconstruction and

expansion of the Castries-Gros Islet

highway and repairs to a number of

areas which suffered infrastructural

damage from the 2010 hurricane and

floods. These include repairing the

island’s south-western roads, bridges,

the Babonneau Fire Station and the

Hewannora International Airport.

Following the completion of the

infrastructure, the first 12 beachfront

resort villas at Six Senses Freedom

Bay are scheduled for completion

by the end of 2014. The 60-acre

ecofriendly development will

include hotel villas, luxury homes

and apartments. The island will also

benefit from additional cruise ships.

After an eight-year hiatus, Port

Castries is back on the Disney Cruise

Lines itinerary with a total of five

calls to Saint Lucia for the 2014/2015

cruise season. As a result, Port

Castries is scheduled to welcome

over 685,000 cruise passengers

and over 375 cruise ships over the

2014/2015 cruise season.

Singapore Sports Hub, Singapore

Architect: DP Architects Pte Ltd

Singapore Sports Hub, Singapore


In China, GDP growth has been revised down slightly to 7.38% from the initial estimate of 7.50% as has Hong Kong down from 3.70% to 3.00%. Construction growth within real estate remains strong and showed year on year an increase of 12.4%, with a similar year on year growth of 12.3% for total floor area under construction. There was a drop of 5.5% year on year for total floor area of new projects. China are still implementing their carefully managed slowdown and while they have slowed some sectors, there are stimulus measures to support housing projects, public infrastructure and tax relief to small and medium enterprises in order for China to reach its growth target.

japan’s GDP growth is lower than first expected dropping from 1.40% to 0.89%. The drop is partly due to increases in sales tax and the rising costs of energy imports since the shutdown of nuclear reactors. Wage growth remains subdued and unemployment remains high. The central bank has announced further monetary stimulus aimed to bolster growth and prevent inflation.

MARKET INTELLIGENCE

ASIA ASEAN 5 countries Indonesia, Malaysia, the Philippines, Singapore and Thailand have all seen a marginal reduction in forecast growth for 2014 with the exception of Malaysia who have had an increase from 5.20% to 5.90%.

With the October 2014 announcement that China and 20 other Asian countries have agreed to create an international infrastructure bank, beijing is hoping the fund will rival American-led agencies like the World bank, giving them regional autonomy in creating funding for strategic regional infrastructure projects. Continuing infrastructure investment across Asia is hoped to be fast tracked with access to these funds which augers well for the construction industry as a whole.

ASIA CONSTRuCTION COST RELATIvITIES

Q1, 2015

HONG KONG 157

MACAU 133

bEIjING 91

SHANGHAI 90

GUANGzHOU 85

SHENzHEN 80

RLB CONSTRuCTION mARKET ACTIvITy mOdELASIA - gROWTH SECTORS vS dECLINE SECTORS

NUMBER OF CITIES

5

2

1

0

3

4

6

7

10

8

9

GROWTH DECLINE



COuNTRy 2014% 2015% 2016%

bANGLADESH 6.21 6.40 6.76

bRUNEI DARUSSALAM 5.30 2.99 3.38

CAMbODIA 7.18 7.31 7.34

CHINA 7.38 7.09 6.84

HONG KONG SAR 3.00 3.25 3.50

INDIA 5.63 6.35 6.46

INDONESIA 5.16 5.49 5.80

jAPAN 0.89 0.83 0.84

KOREA 3.73 3.97 3.99

LAO P.D.R. 7.37 7.23 7.66

MALAYSIA 5.90 5.20 5.00

MYANMAR 8.50 8.50 8.25

PHILIPPINES 6.24 6.27 5.98

SINGAPORE 2.96 3.04 2.95

SRI LANKA 7.00 6.50 6.50

TAIWAN PROVINCE OF CHINA

3.49 3.84 4.18

THAILAND 0.96 4.62 4.40

VIETNAM 5.50 5.60 5.70

LOCATION INTELLIGENCEASIA


BEIJINgBeijing’s economic growth has

remained steady with GDP in the

3Q 2014 growing by 7.3% year-on-

year which was slightly higher by

0.1% than in 2Q 2014. Fixed assets

investment grew 6.9% year-on-year

while the Consumer Price Index in the

3Q 2014 registered a slight increase

of 1.9% year-on-year. Beijing’s

economy is indeed cooling down

which is in line with Chinese leaders'

plans for a controlled slowdown.

The office market still has the lowest

vacancy level across China due to

under-supply. Rents appreciated for

the second consecutive quarter in

3Q 2014. However, as supply is

expected to surge significantly next

year, the rising trend will reverse in

1Q 2015. On the other hand, in the

retail sector rental growth has slowed

down due to relatively weak demand

for luxurious consumer goods.

The residential market remains weak

in terms of transaction volumes and

prices, as many buyers take on a

wait-and-see approach due to the

uncertainty over the future direction

of the market. Beijing’s government

will continue to control the capital’s

residential market with taxation,

credit tightening and purchase-

restriction policies, hence property

prices are expected to drop further.

In addition, leasing demand from

expatriates has weakened. Rents

are set to decrease as a result of the

tightening leasing budget of foreign

companies.

The Chinese government finally

approved the US$3.25 billion

Universal Studios movie theme

park, Universal Beijing. To be built

in Tongzhou, an eastern suburb of

Beijing, after 13 years of negotiation

and planning it will be the biggest

park Universal has ever built. It is

expected to open in 2019. The Initial

stage is planned to be built with an

area of 300 acres and it is expected

to expand to 1,000 acres when all

stages are complete. The park will be

jointly owned by a consortium of four

Chinese state-owned companies and

Universal Parks & Resorts.

The new tallest building in Beijing

“Zhongguo Zun”, designed by TFP

Farrells, KPF and BIAD and located

in eastern Beijing at the heart of the

new CBD extension, will be over 120

storeys and more than 500 metres in

height. Being part of the 30-hectare

master plan at the core of the

district, the building accommodates

2 million m2 of office space, six-star

hotels, luxury service apartments and

high-end retail that connects to the

existing metro station and adjacent

shopping malls. The “Zhongguo Zun”

is expected to be complete in 2018.

Tender prices in Beijing have

remained stable but with the

workload stalling, contractors are

more willing to offer discounts under

mounting competition. In addition to

this, the costs of reinforcement bars

are still at a low level, while prices of

other building materials and labour

costs have remained relative stable.

Tender prices are expected to face

downward pressure in the next few

months, before starting to pick up in

late 2015.

CHENgduAlthough China’s GDP growth

has slowed down, the economy

of Chengdu has remained stable.

According to Chengdu Statistics

Bureau, Chengdu’s GDP in the 3Q

of 2014 increased 9.03% when

compared with last year, which was

0.55% higher than the nationwide

GDP growth. Chengdu’s Consumer

Price Index (CPI) increased 1.30% in

the 3Q of 2014 and the increment

was lower than the national CPI by

0.67%.

In October 2014, the 15th Western

China International Fair (WCIF) was

held in Chengdu. The WCIF serves as

an important platform for investment

promotion, trade cooperation and

diplomatic service in western China.

In 2014, a number of prominent

international guests such as U. S.

first lady Michelle Obama and the

Chancellor of Germany, Angela

Merkel visited Chengdu. These visits

have enhanced the global image

of Chengdu and strengthened its

position as an important city in

Western China.

In 2014, the Chengdu government

supplied about 240.7 hectares of

land for residential development

and 216 hectares for commercial

use, representing an annual increase

of 10% and 33% respectively. Land

prices and turnovers have declined

compared with the same period last

year. According to the China Index

Academy, in the first three quarters

of 2014, land transaction value has

declined approximately 20% on a

year-on-year basis.

In October 2014, Tianfu Xinqu

district, with an area of 1,578 km2,

was approved as a new national

development district. The largest city

park in Chengdu will be constructed

in the core of Tianfu Xinqu, which will

be a new town with IT, commercial,

business, cultural and administration

centres. It will serve as the link

between Western China and the

world.

Location inteLLigenceASIA


Lotte Group is developing

their first project in Chengdu, a

540,000 m2 complex comprising

residential, office, hotel, cultural and

entertainment facilities. Chengdu

Joy City is being developed by

COFCO Property (Group) with a total

construction floor area of 330,000

m2, comprising shopping, dining,

entertainment and office facilities.

According to Chengdu Urban and

Rural Construction Commission the

total floor area of projects under

construction in Chengdu from

January to July 2014 was 42 million

m2, including 26.7 million m2 for

residential and 15.3 million m2 for

others. The total construction floor

area has decreased 10.09% compared

to the same period last year.

Chengdu’s labour cost increased by

6.8% on an annual basis in 2014. The

market prices of ready mix concrete

and steel in September 2014 declined

by 1.42% and 25% respectively

comparing with the prices in January

2014.

Due to the slowdown in GDP growth,

development activities in Chengdu

are forecast to decline in 2015.

Although current tender prices

remains stable, it is expected that

prices will face downward pressure in

the coming few quarters.

guANgZHOuGuangzhou’s economy has grown

steadily from the 1Q 2014. GDP for

Q3 2014 was about RMB 1.2 trillion

and grew by 8.5% year-on-year. Fixed

asset investment, retail sales and

exports posted annualised growth of

14.2%, 12.5% and 19.5% respectively

in 3Q 2014 – all higher than figures

recorded in the first half of the year.

CPI in the 3Q 2014 rose by 2.4%. The

economic outlook is still optimistic

though not as strong as previous

years.

The municipal government has

identified 136 projects currently

undertaken in Guangzhou for close

monitoring. Significant projects

include eleven underground railway

lines, four incinerators, Phase 2 of

China Mobile’s southern operation

base, Alibaba’s South China logistic

centre, Tencent’s South China

e-commerce operation headquarters,

three newly built or extensions to

hospitals, the infrastructure and

advance works for the “Guangzhou

Financial Centre”, a new 7.5 km2 CBD.

The government’s curb on home

prices has been impacting upon the

property market and it has taken its

toll. Real estate and land transactions

have dwindled significantly and

the related tax income which used

to be a major contribution to the

government has tapered off. The

government has been stalling earlier

plans for fixed asset investment amid

a shortage of capital. The contraction

in property and land sales, together

with downsized government

investment, will drag down the level

of construction activities in the near

term. The government however has

made announcements to launch

extensive land auctions by the end of

2014 – an effort to boost its income

- yielding better prospects from the

construction sector around mid-

2015. Concrete and reinforcement

supply costs have fallen by 5% and

10% respectively while labour costs

have remained stable since 1Q 2014.

Tender price movement is forecast to

dip to 2% by the first half of 2015.

HONg KONgHong Kong’s economy grew moderately by 2.7% year-on-year in real terms in the 3Q 2014, compared with the 1.8% increase in the 2Q 2014. On a seasonally adjusted quarter-to-quarter comparison basis, real GDP increased in the 3Q 2014 by 1.7% over the 2Q 2014. According to the Composite Consumer Price Index, overall consumer prices rose by 5.2% in October 2014 over the same month a year earlier, higher than the corresponding increase of 6.6% in September 2014. The seasonally adjusted unemployment rate stood at 3.3% in September to November 2014, same as that in August to October 2014. The under employment rate increased from 1.5% in August to October 2014 to 1.6% in September to November 2014.

Hong Kong’s economic activities have been showing some signs of mild slowdown in recent months especially in the retail sector which may have some dampening effect on investment sentiment. With the government’s determination in maintaining a steady supply of land for private developments, the impact of a weaker economy on the construction industry will not be very significant. On the other hand, the delay in funding approval for a large number of public projects by the Legislative Council since early this year will have a substantial impact on the workload of the construction industry in the medium term if the situation does not improve quickly. Nevertheless, the construction industry is currently at the peak of output thanks to increased public expenditure in infrastructure works as well as public buildings. The shortage of skilled workers and professionals is still a major concern, but the pressure on tender prices has been mitigated by stable material prices to a certain extent.

RLB’s Tender Price Index, which measures tender price movements of builder’s works in the private sector in Hong Kong, increased by 1.5% in tender prices in the 3Q 2014. On a year-on-year basis, the increase was 8.7%. On the whole, it is forecast that the increase in tender prices will gradually become more moderate towards the

later part of 2015.

Jockey Club Innovation Tower, The Hong Kong Polytechnic University, Hong Kong

Architect: Zaha Hadid Architects



HO CHI mINH CITyVietnam’s economic growth in Q3

2014 expanded 6.2% compared with

the same quarter of the previous

year. It is a gradual increase from

5.42% in 2Q 2014 and 5.09% in

1Q 2014. Support from a robust

manufacturing sector and export

demand is assisting a slowly

recovering economy as the domestic

economic markets deal with slowing

inflation and investment growth.

For 2015, the government is targeting

Vietnam's GDP to rise to 6.2%, up

from a projected 5.8% for 2014.

In 2014, the annual inflation rate

decreased from 3.6% in September to

3.2% in October, which remains well

below the government's initial target

of 5.0%. In the January-September

period, the Consumer Price Index

(CPI) rate stood at 2.3%, the lowest

nine-month inflation rate in the past

decade. The government is expecting

the inflation rate to end below 3.0%

for 2014 while in 2015, the average

inflation rate is forecast to accelerate

to 6.8%.

While Vietnam's central bank had cut

its policy interest rates twice in 2014

to encourage lending, credit growth

was at 7.85% at the start of the 4Q

2014 from the end of 2013, compared

with a goal of 12.0%-14.0% for 2014.

The Official Development Assistance

(ODA) is the World Bank’s assistance

program of foreign aid to Vietnam

since 1993. The construction market

continues to see growth that is

driven by ODA in infrastructure.

The majority of the funds to date

have come from loans from foreign

governments or international

agencies such as the Japan Bank of

International Cooperation and the

Asian Development Bank. Vietnam

expects to disburse about $US 3

billion in untied ODA funding annually

from 2011 to 2015. Sectors prioritized

for ODA funding are primarily in

infrastructure construction. It is

expected that more Foreign Direct

Investment (FDI) will start driving

growth within the commercial

building markets at the end of 2015.

Domestic funded development is

predicted to remain flat until 2016.

While South Korea is Vietnam’s

biggest foreign investor, Singapore

and Japan are the top two

investors into the real estate sector.

Singapore's Keppel Land Vietnam

had increased its ownership to 98.0%

in The Estella apartment project in

Ho Chi Minh City. Notable property

projects in 2014 include the US$300

million Alma Resort in Central Khanh

Hoa Province by Israel’s Alma Group.

The anticipated US$4 billion South

Hoi An integrated casino resort

in central Quang Nam province is

slated to commence construction

in mid-2015. The project is a joint

development between Vietnam's Vina

Capital and another foreign project

investor, and will comprise of a 500-

room five star hotel, villas and gaming

facilities on a 1,000 hectare site.

Notwithstanding geo-political

tensions between Vietnam and China

over the parking of a Chinese oil rig

in contested South China Sea waters

near Vietnam in May 2014, foreign

investors continue to have an interest

in the Vietnam construction market.

Foreign Direct Investment (FDI)

increased nearly 6.0% to US$10.2

billion in the first three quarters of

2014 with Ho Chi Minh City being

the largest beneficiary. The building

and construction industry increased

6.4% with the real-estate business

and construction gaining over

US$1.22 billion and US$1.03 billion

respectively. More Foreign Invested

Enterprises (FIEs) are encouraged

with the support of Vietnam's new

Land Law and Construction Law

which take effect from 2014 and 2015

respectively.

Barring any unforeseen market

conditions, building tender prices in

Ho Chi Minh City are anticipated to

increase by 3.0% to 6.0% for 2015.



JAKARTAIndonesia’s GDP growth slowed

further to 5.01% year-on-year (y-o-y)

in 3Q 2014, the slowest rate since

2009. It is predicted to drop slightly

below 5.0% in 4Q 2014. Growth has

been constrained in 2014 after the

central bank raised interest rates in

2013 to restrain domestic demand,

rein in both inflation and the current

account deficit together with a ban

on exporting unprocessed mineral

ores. Inflation is expected to be

between 3.5%-5.5% for full year 2014.

Accelerating building infrastructure

development for electricity

generation and transmission, ports,

airports and roads are the new

government's priority to create

more fiscal room for economic and

social development. Indonesia’s

dependence on imported fuel must

be addressed by building local oil

refineries. President Widodo pledged

the construction and expansion of

24 integrated seaports across the

archipelago, the development of toll

roads along the shore of Java and

the construction of 35,000 megawatt

power plants during his 5-year

presidential term.

In 4Q 2014, Indonesia's new

government under President Widodo

raised fuel prices by nearly 31.0%.

This freed up state budget by more

than 100 trillion rupiah (US$ 8.2

billion) and 16 trillion rupiah (US$1.3

billion) to invest in the growth of

infrastructure facilities and other

productive sectors respectively. The

nation is projected to have a faster

economic growth of 5.8% for 2015

from an initial forecast of between

5.2-5.3%, as well as a full-year 2014

inflation of 7.3% after taking into

account the fuel price hike. The fuel

price hike is expected to further

boost confidence among foreign

investors in the new government

to pursue an over 7.0% economic

growth within 2 years.

Indonesia's construction sector

grew 6.28% y-o-y in 3Q 2014, down

slightly from 6.59% y-o-y in Q2

2014. Several state-funded projects

which commenced in 4Q 2014

include the IDR2 trillion (US$165 million) airport railway project that will connect Greater Jakarta to Soekarno-Hatta airport. It is expected to be completed by the end of 2015. State-run construction firm Waskita Karya allocated nearly IDR600 billion (US$49.27 million) in the form of cash and assets including machinery and building for the Bekasi-Cawang-Kampung Melayu toll road project. The 100% precast concrete toll road, which costs an estimated IDR5 trillion (US$418 million) is scheduled to be completed in 2016.

Property prices in Indonesia are expected to rise in early 2015 as higher subsidized fuel prices and higher bank interest rates imply greater construction (local labour, local materials and transportation) costs and increased borrowing costs, leading property developers to raise sales prices to offset losses. There is caution of a multiplier effect on inflation that trickles down to the lower income households who will have declining purchasing power by up to 30.0%.

Indonesia tightened up restrictions on foreign investments in local businesses. Foreign ownership is limited to 55.0% in sectors involving construction consulting, design and architectural services and engineering services. While it is believed that Indonesian construction workers will now have a higher competitive value in the ASEAN region, it also makes it difficult for individual ASEAN job seekers to find job opportunities in Indonesia. The country further announced it would terminate its Bilateral Investment Treaty (BIT) with the Netherlands from 1 July 2015. Within Indonesia, Jakarta introduced new procedures for securing a Construction Services License (Ijin Usaha Jasa Konstruksi or IUJK) to provide construction services as planners, contractors or supervisors. The IUJK has a three year validity and can be extended.

Barring any unforeseen market conditions, building costs are anticipated to increase by 1.0%-3.0%

in 2015.



KuALA LumPuRMalaysia's economy grew at its

slowest pace during the 3Q 2014, as

annual growth slipped to 5.6% from

a revised estimate of 6.5% growth

in 2Q 2014, with exports struggling

against a fragile global economy.

Along with the ongoing 10th Malaysia

Plan, Economic Transformation

Programme (ETP) and Government

Transformation Programme (GTP),

the Malaysian economy is expected

to sustain its growth momentum

in 2015. The Ministry of Finance

(MOF) kept its forecast for full year

growth between 5.5-6.0% in 2014 and

between 5.0-6.0% in 2015. Inflation

is expected to remain within 3.0-

4.0% for 2014. It is projected to rise

between 4.0-5.0% in 2015 before

stabilizing toward an average of 3.0%

in 2016, due to subdued external

price pressures and moderate

domestic demand.

In conjunction with the 2015 Budget,

Malaysia’s revised 6.0% goods and

services tax (GST) will take effect

in April 2015 which is expected to

raise RM21.7 billion in revenue. In 4Q

2014, the government abolished fuel

subsidies where prices of petrol and

diesel will be fixed on a managed

float mechanism that will move

in tandem with global oil prices.

Malaysia is estimated to save RM20

billion annually from the fuel subsidy

removal alone. The government

will continue to shrink its subsidy

program where total subsidies are

expected to be cut around 7.0%,

from RM40.6 billion in 2014 to RM37.7

billion in 2015. The nation aims to

reduce the fiscal deficit from an

expected 3.5% of GDP for 2014 to

3.0% of GDP in 2015, while ensuring

that its public debt does not surpass

a limit of 55.0% of GDP.

The Malaysian government is

planning to implement infrastructure

investment worth RM75 billion

(US$23 billion) in a bid to boost

growth amid concerns of a curb

in private spending arising from

subsidy cuts and impending Goods

and Services Tax. Such infrastructure

investments include highways and

a rail system. The most notable of

this investment is the construction of

the Pan Borneo Highway spanning

the two East Malaysian states of

Sabah and Sarawak with a total

length of 1,663km. The other notable

investments are seven new highways

worth RM21 billion (US$6.19 billion)

surrounding the capital Kuala

Lumpur.

The construction sector recorded

a strong growth of 9.6% in the 3Q

2014. It is anticipated to expand

with a growth rate of 10.7% in 2015.

This is supported by oil and gas

(O&G) related projects such as

the Refinery and Petrochemical

Integrated Development (RAPID)

and ongoing transportation-related

infrastructure projects. Demand

for affordable housing will also

support the construction industry.

Construction costs are projected to

continue trending upwards due to the

increased volume of work, the rise of

transportation costs from the removal

of fuel subsidy, the implementation of

GST and the projected rise in inflation

due to domestic cost factors.

Barring any unforeseen market

conditions, building tender prices

in Kuala Lumpur are anticipated to

increase by 3.5% - 4.0% in 2015.



SHANgHAISince January 2014, Shanghai’s

economy has been in a stable

condition. Both the industry output

and consumer spending have shown

signs of improvement at a slow but

steady pace.

In the first three quarters of 2014,

the GDP for the Shanghai area

was RMB 1,661 billion which was

7.0% greater than that in the same

period last year. It is predicted that

the overall increase of GDP in 2014

will not exceed 7%. The increase

of CPI for the period of January to

September 2014 was 2.7% comparing

to the same period last year, and it

is estimated that the annual increase

will not be more than 3%.

During the period of January to

September 2014, a total amount of

RMB 217.55 billion was invested in

local property developments which

was an 8.2% increase compared

to the same period last year, and

represented about 55.6% of the

overall investment to fixed assets.

Based on the types of property,

a total of RMB122.691 billion was

invested in residential developments,

which was an increase of 9.6%

comparing to the same period

last year. Total amounts of RMB

33.07billion and RMB 30.823 billion

were invested in office buildings and

commercial buildings respectively,

which represented increases of 14.8%

and 10.8% for the respective property

type compared with the same period

last year.

There were 85 major projects under

construction in Shanghai in 2014,

including the development of an

engine factory for commercial

aircraft, a shipbuilding facility on

Changxing Island, the Shanghai

Disney Resort and the Shanghai

Tower skyscraper, the construction

of the fourth runway at Pudong

International Airport, the expansion

of Shanghai No. 1 People's Hospital,

the second phase of SAIC automobile

research and development centre,

the second phase of the Chinese

Academy of Science Pudong Branch,

and the construction of the National

Convention and Exhibition Centre in

Hongqiao Business District.

Traffic projects include the

renovation of Terminal 1 building

of Pudong airport, the expansion

of China Eastern Airlines' base at

Hongqiao airport, the extension of

Highway S6 and Jiading-Minhang

Expressway, and the third phase of

Metro lines 9, 13 and 17. The city is

also building Huangpu River tunnels

for Zhoujiazui Road, Hongmei Road,

Jinhai Road and Changjiang Road.

Tender prices have not changed

significantly in 2014. It is expected

that the tender prices will remain

relatively stable in the next 12 months

with mild decreases in the range of

2 - 3%.

mACAuAccording to the Statistics and

Census Service of the Macau

government, GDP for the 3Q 2014

decreased by 2.1% year-on-year in

real terms. The unemployment rate

for August to October 2014 stood

at 1.7%, same as that in July to

September 2014. The average daily

wage of construction workers was

MOP672 in the 3Q 2014, increased by

2.3% on a quarter-to-quarter basis.

The average daily wages of skilled

and semi-skilled workers increased by

2.4% to MOP677 and that of unskilled

workers rose by 0.8% to MOP390.

Major projects under construction

include the expansion of the six

major gaming resorts and the Light

Rapid Transit (LRT) System which

commenced construction in 2012. On

completion of Phase 1 in 2016, the

LRT will connect the border entry-

exit points at the Macau Peninsula

and Taipa with major residential and

tourist areas.

In the past few months, there has

been a slump in gaming revenue,

with the Gaming Inspection and

Coordination Bureau recording a fall

of 23.2% year-on-year in November

2014. Home prices have also started

to decline, and the fall is expected

to continue in the coming months.

Whilst the construction industry is

still heavily involved in the six major

gaming resorts which are on target to

be completed in late 2015 and 2016,

the weakening economy will result in

a reduced workload after completion

of these projects and a milder rise in

construction costs.



SHENZHENShenzhen’s GDP growth in 1H 2014

was 8% compared with the same

period last year. This percentage

was slightly higher than that of the

1Q 2014, and was also slightly better

than the total GDP growth of 7.5%

nationwide. The city remains as one

of the top ten fastest growing cities

in China.

The structure of the 600-metre Ping

An Finance Centre will be topped-

out in early 2015. The excavation of

the 300-metre adjoining hotel tower

has already commenced. The entire

development is scheduled to be

completed in 2017 which will certainly

add some synergy to the current well

planned CBD in Futian district. China

Resources Da Chong’s 3,000,000m2

redevelopment is ongoing in full

steam. There are also several major

developments in the new CBD in Qian

Hai area of Shenzhen. The number of

land parcels available for auction is

being controlled, enabling a steady

supply of office and commercial floor

areas in a smooth manner.

The construction market is stable

at the moment. It is not overheated

and contractors are eager to take on

more projects as the Government's

controlling measures on cooling

down the property market persist.

Material prices have generally been

declining, in particular the price

of steel bar reinforcement while

labour costs have been rising mildly,

resulting in a rather flat tender price

movement.

SINgAPORESingapore’s economy grew by 2.8%

y-o-y in 3Q 2014, the same pace of

growth in the preceding quarter. The

construction sector grew by 1.7%

on a y-o-y basis, a sharp slowdown

from the 3.7% growth in the previous

quarter. This is due to a fall in private

construction output, reflecting a

weaker market across the residential,

commercial and industrial sectors.

The Ministry of Trade and Industry

(MTI) expects the economy to grow

by around 3.0% for the whole of 2014,

and between 2-4% in 2015.

The CPI-All Items inflation eased

to 0.6% in September from 0.9%

in August and 1.2% in July, mainly

reflecting a sharper decline in

private road transport costs along

with a more moderate increase

in services fees and a further

decline in accommodation costs.

The government's introduction of

enhanced medical subsidies, including

the Pioneer Generation Package

(PGP) also contributed to the

slowdown of inflation.

The Monetary Authority of Singapore

(MAS) Core Inflation measure, which

excludes the costs of accommodation

and private road transport, edged

down to 1.9% in September from

2.1% in August. MAS Core Inflation is

projected to stay elevated at 2-2.5%

in 2014, down from its earlier forecast

of 2-3%. CPI-All Items inflation is

projected to come in at 1-1.5% in 2014.

For 2015, it is projected at 0.5-1.5%,

reflecting also the impact of muted

housing rentals.

Amidst the weak global market,

Singapore Tourism Board data

shows that the tourism industry

has witnessed a strong and rapid

annual growth rate of 10% in tourism

receipts and 6.6% annual growth in

visitor arrivals in the past decade.

Construction works for the notable

S$1.57 billion Changi Airport’s Project

Jewel and expansion works for

Terminal 1 are slated to start at the

end of 2014 and be completed by the

end of 2018. With the continuity of a

resilient domestic demand and strong

growth in the number of international

tourists, additional infrastructure is

being planned and built to support

the gross domestic product and job

market.

Labour productivity for construction

fell 1.3% in the first half of 2014,

despite efforts by the Ministry of

Manpower (MOM) to incentivise firms

to invest in more skilled workers and

better equipment, through training

programmes and grants. This is in

line with overall efforts to achieve

quality growth driven by productivity

improvements. The construction

sector which has contracted for two

consecutive quarters, continues to

struggle with higher foreign worker

levies, amidst a slowing property

market and delays in public projects.

Tender prices remain competitive

into 2015 despite construction costs

continuing to rise following the

Government’s introduction of further

regulations to improve construction

productivity.

Based on current trends and in

the absence of any extraneous

circumstances, RLB is presently

forecasting building costs to increase

by 1-3% on average for 2015.

Debenhams, United Kingdom

Architect: Ingenium Archial / Archial NORR


The UK is gaining momentum but parts of the Euro Area are lagging behind. The UK’s forecast GDP growth for 2014 being revised from 2.90% to 3.21% while countries like Cyprus at -3.22%, Italy at -0.17% and Finland at -0.19% have had negative growth. Low growth has been seen in France at 0.37%, the Netherlands at 0.60%, Portugal at 0.99%, belgium at 0.98 % and Austria at 1.01 %. While others in the Euro Area are showing more positive signs such as Ireland at 3.62%, Luxemburg at 2.69% and Latvia at 2.66%.

The Commonwealth of Independent States has seen a 0.75% decline in GDP for 2014 while the Euro Area is forecasted to grow by 0.83%, an increase on the previous two negative growth years. The Euro Area remains in a slowly recovering state, forecasting GDP growth at 1.3 and 1.7% for 2015 and 2016 respectively.

For countries in the European Union there are varying figures across countries. Croatia and Serbia have both had negative growth at (0.82%) and (0.54%) respectively

MARKET INTELLIGENCE

EUROPE while Poland at 3.25%, Turkey at 3.03%, Lithuania at 2.98% and Iceland 2.91% are helping to bolster the figures for the European Union.

While most of European economies look to changing fiscal policies to strengthen their economies, the economic outlook is improving. The bourgeoning anti austerity movement is gaining momentum, as recently witnessed in Greece, and may force renegotiation of debt repayment timings with the European Central bank, causing implications for the troika of debtor countries.

The German construction sector is still growing but at a slower pace than in recent years. There are positive signs in the Netherlands and Spain where the hardest times appear to be over, as these two countries showed improvement throughout the whole of 2014. France and Italy are not recovering as fast as expected during 2014. The british market keeps on improving, due in part to the growth in building permits for non-residential buildings, indicating a potential strong pipeline of future work.

EuROPE CONSTRuCTION COST RELATIvITIES

Q1, 2015

LONDON 157

bRISTOL 132

MANCHESTER 122

bIRMINGHAM 118

RLB CONSTRuCTION mARKET ACTIvITy mOdELEuROPE - gROWTH SECTORS vS dECLINE SECTORS

NUMBER OF CITIES

6

2

0

4

8

12

10

GROWTH DECLINE



COuNTRy 2014% 2015% 2016%

AUSTRIA 1.01 1.86 1.66

bELGIUM 0.98 1.40 1.50

bULGARIA 1.40 2.00 2.50

CROATIA (0.82) 0.50 1.40

CYPRUS (3.22) 0.43 1.56

CzECH REPUbLIC 2.49 2.53 2.44

DENMARK 1.54 1.80 1.86

ESTONIA 1.23 2.48 3.45

FINLAND (0.19) 0.92 1.59

FRANCE 0.37 0.95 1.55

GERMANY 1.39 1.45 1.81

GREECE 0.60 2.87 3.71

HUNGARY 2.80 2.30 1.80

ICELAND 2.91 3.03 2.70

IRELAND 3.62 3.05 2.54

ITALY (0.17) 0.85 1.30

LATVIA 2.66 3.18 3.39

LITHUANIA 2.98 3.35 3.66

LUxEMbOURG 2.69 1.90 2.14

MALTA 2.20 2.23 2.02

NETHERLANDS 0.60 1.43 1.56

NORWAY 1.80 1.86 1.99

POLAND 3.25 3.31 3.50

PORTUGAL 0.99 1.55 1.74

ROMANIA 2.40 2.52 2.80

SAN MARINO (0.01) 2.18 2.41

SERbIA (0.54) 1.04 1.50

SLOVAKIA 2.35 2.65 2.90

SLOVENIA 1.44 1.39 1.53

SPAIN 1.31 1.69 1.79

SWEDEN 2.11 2.74 2.72

SWITzERLAND 1.25 1.60 2.01

TURKEY 3.03 3.01 3.74

UNITED KINGDOM 3.21 2.71 2.44

COmmONWEALTH Of INdEPENdENT STATES

RUSSIA 0.24 0.51 1.50

KAzAKHSTAN 4.61 4.71 4.84

UzbEKISTAN 7.00 6.50 6.00

AzERbAIjAN 4.47 4.32 3.47

TURKMENISTAN 10.12 11.46 9.89

UKRAINE (6.50) 1.00 4.00

bELARUS 0.94 1.48 2.05

GEORGIA 5.03 5.00 5.04

ARMENIA 3.18 3.50 3.70

TAjIKISTAN 6.00 6.00 5.75

KYRGYz REPUbLIC 4.10 4.93 5.02

MOLDOVA 1.80 3.50 3.80

LOCATION INTELLIGENCEEuROPE


AmSTERdAm Due to new sustainability regulations,

developers are requesting permits

before the end of 2014. For housing,

the "energy norm" will be 33%

tougher than before. Sustainability

regulations will change extensively in

2015 for many commercial building

types. The next step will be the 2020

"energy norm" that provides that new

buildings cannot use more energy

than they produce themselves.

With more transformations of existing

buildings due to real estate market

having changing needs from 20 years

ago, we are seeing office buildings

being redeveloped into housing or

hotels.

Schiphol airport is in the planning phase for the redevelopment of the existing airport to position it as a significant hub. After a large security renovation project that split the ingoing and outgoing travellers, Schiphol is now working on extending the airport to increase the capacity with a complete new area (more than

100,000 m2). This project is in its master plan phase and will be worked on for the next few years to come.

Amsterdam Metro is undertaking significant projects. The new North South line being constructed under the existing city is expected to be completed in 2017. Concurrently the city is working on the renovation of the existing East line. It requires an upgrade after 40 years to meet the new standard of the new North South line. This project is expected to be ready in 2016-2017.

After a few poor years in the Dutch building industry the forecast is looking brighter for 2015 and 2016. Most recent indications (October 2014) show a growth of 4.0% for 2015 and 3.5% for 2016 for the whole sector. The residential sector is forecasted for the largest increase of 7.0% for 2015 and 6.5% for 2016 which will mostly come from new built residential projects. The commercial sector forecasts also

shows an increase of 2.5% for 2015 and 2.0% for 2016. There is still significant vacant space in office and education buildings around the city, but some of the growth will come from new development in the health sector.

Infrastructure has had two years of decline with a total decrease of 10.0%. The Government is planning to have more projects underway during the next two years which results in a forecast growth of 1.0% for 2015 and 2.0% for 2016. Most of the work will be concentrated around the Randstad region.

During the period 2009 to 2013, employment has decreased extensively. The forecast growth in the market will have a positive effect on the employment in the building industry for the coming years.

BERLINCurrent global political and economic

upheavals and associated risks

have also dampened the up to now

high levels of economic growth and

exports within Germany. The Berlin

Chamber of Commerce Economic

Index has fallen to the level of last

autumn, but this is not seen as a

stagnation or recession.

Currently the area around Berlin main

station (Hauptbahnhof) is surrounded

by construction work: several hotel

and office buildings are being

constructed or planned, among which

is John F Kennedy House, a ¤70m

office block. The new ¤250m tower

building "Upper West" near Zoo

Station has commenced construction.

The overall rate of inflation in

Germany is still very low, and

stagnating at present at around 1%.

Construction costs however have

been rising more strongly at around

1.7%, with fit out trades at around 2.4

– 2.7%, while shell and core trades at

much lower levels of around 0.8 %.

BIRmINgHAmThe midlands area continues to show

signs of recovery, albeit that many

proposals need to be underpinned

with pre-lets. The retail market is

also showing signs of a growing

confidence with many schemes

being resurrected. However with

the pressure within the retail sector

to maximise cashflows, greater

emphasis is being placed on mixed

use developments to spread retailing

revenue exposure.

Small churn and micro developments

are being created to maximise

and improve existing assets. The

university and education sectors

continue to develop student housing,

teaching and research facilities.

Fee earning levels continue to be

competitive with the demands on

delivery more intense and the scope

detail being carefully challenged.

The shortage of new Grade A office

space is feeding the development

and refurbishment pipeline such as

the developments at Paradise Circus,

Arena Central and 55 Colmore Row.

With the increase in tendering

activities, contractors are carefully

reviewing the risk profile of each

project including contract conditions,

the tender process, construction risk

profile and programme, before they

commit to return a tender or enter

the tender process.

Feedback through the supply

chain continues to indicate that

the previously perceived skills

shortage is developing, together

with materials, plant and equipment

shortages which may drive up costs

and hinder programme delivery. This

is specifically evident with the early

trades of brick/concrete works and

ground works.

Location inteLLigenceEuropE


The Universities in and around

Birmingham have, or are in the

process of, delivering major projects.

Warwick University with JLR &

TMETC are developing a 33,000m2

research facility, Aston University has

recently resurrected a redevelopment

and tower scheme as well as student

accommodation blocks are also under

consideration.

The retail sector is showing continued

signs of investment as several retail

schemes are on the drawing board

as either new ventures or previously

shelved schemes being resurrected.

Lichfield has various scheme options

being investigated. There are also

signs that residential schemes

are being dusted off and new

opportunities developed, primarily in

the city centre apartment schemes.

With the squeeze on skilled resources

following the skills loss fallout from

the recession and the more selective

guard of the contractors, which

combined with a shortage of skilled

suitable sub-contractors there is a

general expectation that tender price

inflation will continue to climb into

2015 and 2016.

The skills shortage in each faculty

of the construction process will also

affect the ability to deliver successful

schemes both professionally and

during construction and delivery.

There is a likely increase in the

number of failures of principle supply

chain members and contractors as

market conditions improve.

BRISTOLThe South West market is showing

signs of increasing activity although

it appears to be lagging behind the

rest of the country. There are several

developers moving into the Bristol

market, citing the fact that London is

becoming saturated, improving the

economy locally.

Contractors are becoming

increasingly selective over what

they are prepared to price. With

negotiated tenders they are still

being very cautious and any hint

of significant risk, they are walking

away.

There are several projects converting

offices into residential apartments,

the longer term effect resulting in an

office space shortage.

Shortages of bricks / blocks, in

particular, and other materials

are causing project lead in times

and programmes to be extended.

Construction resources are becoming

short with brickwork labour only

costs, exceeding budgets available

for contractors, on a regular basis.

Labour has been reported as moving

from project to project to secure

better rates and not even turning

up on projects as more lucrative

deals have been secured elsewhere.

This creates tension on projects

both commercially and with overall

delivery programmes.

The consultants market is also

moving with salaries rising, and for

some positions quite dramatically.

Constructions costs are rising and

skill shortages are occurring for

contractors. With professional fees,

however, the market is still fiercely

competitive and well below realistic

levels.

The £24 billion Hinkley Point power

station is now moving forward

causing resourcing issues around

Somerset. Other significant projects

coming to the market will be the

£500 million redevelopment of both

the University of Bristol and the

University of the West of England.

Network Rail is planning a major

investment at Temple Meads where

the surrounding areas are ear marked

for major redevelopments including

the Bristol Arena, new housing and

office / retail projects.

The market will continue to rise

into 2015 but thereafter may well

level off. The political effect of

the 2015 election will potentially

affect construction activity. All

construction sectors are showing

signs of shortages and due to the

magnitude of Hinkley Point , clients

are becoming concerned of the drain

on resources to Somerset.



BudAPEST Budapest and its surrounds, as

the financial and administrational

centre of Hungary, represents the

majority of real estate and property

investment within the country. After

the long recession and stagnation,

signs of growth are beginning to be

seen, although they are weak and

volatile. Annual growth is forecasted

to be between 1-2 % for the next

couple of years.

The construction sector is dominated

by larger state run investments,

backed by European Union finance

such as state or government

buildings, football stadiums,

railway refurbishments and other

infrastructure developments. The

private sector is still relatively quiet

although a few office buildings are

under construction again. Currently,

no major retail developments are

under way however, two larger (a

few hundred thousand m2) mixed

use developments are in the permit

stage. The commencement of their

construction depends on the stability

of growth within the economy and

the increase of the public buying-

power which is currently lower than

in 2007/08.

TPI decreased from 2008 until 2011

and was stable in 2012 and 2013. A

large number of medium and smaller

size companies ceased or terminated

their operations together with a

few larger companies. Due to the

commencement of state-financed

projects this trend has stopped. The

forecasted growth in tender pricing is

between 2–3% for the next two years.

duBLINThe volume of output in building

and construction increased by 7.7%

in 1Q 2014. The volume of output in

the residential sector y-o-y up to 2Q

2014 has increased by approximately

30%. This increase was mainly seen

in both the Dublin and the greater

Dublin area followed by the areas

surrounding the other major cities

(Cork & Galway). August 2014

marked one year of continuous

growth across every sector of the

construction industry. Sub-contractor

availability is declining to levels

similar to 2000. A significant rise in

new orders has led to companies

increasing their purchasing

activities and actively seeking

professional positons. Consultants are

experiencing severe staff shortages

across all sectors. There has been

an increase in employment growth

in the construction sector of over

30% compared to levels experienced

in early 2009. Ongoing forecasts

lead to significant improvements

in the construction sector leading

to increased activities. However,

a significant volume of increased

activities are still centred on the

Dublin Commercial and the Greater

Dublin areas. Activity in the other

major cities (Galway and Cork) are

slower in comparison.

Significant developments underway

include the re development of the

¤60 million former Bank of Ireland

premises in Dublin City, the new

¤30 million Legal premises in Dublin’s

Commercial District, the new ¤25

million headquarters for Lidl in South

Dublin and the ¤200 million joint

venture between NAMA and various

property developers which consists

of the development of 1,000 houses.

As tender prices have shown

evidence of rising there are

now significant shortages of

tradespersons. With enhanced

programme activities for

multinationals such as Intel, resources

in the services industry are thin

on the ground. All trades are at

full capacity having been severely

depleted in previous years. Currently,

a small return of tradespersons to

Ireland, who were previously abroad,

is being observed. Whilst there is

still caution in terms of the longevity

of the current rise in activities,

tradespersons are experiencing

significant capacity shortfalls.

Professional consultancy firms are

experiencing difficulties in hiring

staff with clear evidence of salary

increases across every professional

consultancy sector.



ISTANBuLThe key economic data for Turkey in

2014 is GDP is estimated at 3.0% and

inflation (CPI) at 8.9%. A combination

of high inflation and a large current

account deficit has resulted in the

Turkish lira falling in value, and

with the continued rise of the US

dollar this has been problematic for

businesses.

The inflation rate is of concern not

only to businesses, but consumers

and the government as well.

Emerging markets such as Turkey are

highly dependent on foreign capital

inflows and it remains to be seen

how the end of quantitative easing in

the US will impact emerging market

countries such as Turkey. While

the Turkish economy has remained

resilient in the face of ongoing global

economic worries, there remains

significant difficulties for the Turkish

economy to overcome.

However, despite all this, the property

and construction sector continues

to boom in Istanbul with significant

investment in hotels, residential

and commercial developments and

infrastructure projects under way and

many more planned in the pipeline.

The construction of the third

international airport on the European

side of Istanbul and the third bridge

crossing the Bosporus Sea are the

major projects under construction at

the moment. Both projects are key

factors in the country's continuing

expansion of their transport network

capabilities. The third airport is

also significant part of the tourism

strategy to accommodate a greater

number of flights. The construction

of the third airport is a signal that

the government is attempting to

challenge the Gulf States monopoly

of the Middle East passenger

'connecting' flight traffic to the Indian

sub-continent and the Far East. The

continuing expansion of the Metro

system in Istanbul is another example

of the government’s intention to

develop the creaking transport

infrastructure of Istanbul.

The construction market remains

buoyant and certain sections are

faring better than others. The huge

demand from investors to develop

residential and commercial schemes

shows no signs of abating. The

government is fuelling this growth

with the provision of cheap land. This

strategy is driven by the needs of an

ever expanding city population of 16

million people and their continuing

housing needs. The luxury hotel

sector is experiencing significant

investment with three new five star

hotels opening during 2014. Planned

refurbishments of other five star

hotels means that this sector will

continue to grow as Hotel owners

have to refurbish their properties to

keep pace with the newer properties

introduced into the market.

The Turkish lira has depreciated

against the US dollar this year and

this remains a challenge for the local

currency. The currency weakness

coupled with high levels of inflation

add considerable risk to construction

pricing. This risk can be offset by

agreeing to use Euros or US Dollars

as the project currency, however

only large international clients are

willing or able to accept this, and

opportunities are rare.

LONdONConstruction costs have continued to rise over this past quarter. This is largely as a result of the booming housing market, stronger commercial sector and limited contractor capacity. The residential market continues to experience growth with demand out-stripping supply and house prices are continuing to rise in London, largely driven by overseas investors.

Increased activity in the commercial sector has continued with an upsurge in the amount of pre-lets in speculative developments. Two of the most recent additions to the London skyline, 122 Leaden Hall Street (the cheese grater) and 20 Fenchurch Street (The Walkie Talkie) are 80% and 90% let respectively. The increase in construction costs is having an impact upon the viability of some commercial sector projects and could affect growth.

Contractors are continuing to be selective about which projects they tender for and we continue to see a trend towards two-stage and negotiated tendering. Individual trades are experiencing higher than average inflation. Material price increases for curtain walling and cladding have been encountered. There are labour shortages within the bricklaying trade and the rise in demolition and strip out works are all playing a part.

The second phase of the Battersea Power Station redevelopment has been awarded to Skanska. Kings Cross rents surge by 15% as technology businesses are being attracted by the imminent arrival of Google and their £1bn development in the area. Pharmaceutical and science businesses are also fighting for space due to the fast links to Cambridge, a key research hub and new medical research centre, the Francis Crick Institute. The £1bn Northern line extension has gained final approval and has been designed to pave the way for regeneration of the Vauxhall, Nine elms and Battersea area. This is to include two new tube stations.

As construction activity continues to rise in London, it is not a surprise that construction costs are following suit. With the order books of the supply chain following an upward trend, coupled with a lack in increased labour force or material production, some elements are reaching premium levels. Tender prices are forecast to increase by 5.5% in 2015, 4.75% in 2016, 4.5% in 2017 and 4.0% in 2018.

FC Barcelona, Spain

Architect: ICON Venue Group – Barcelona

Ingenium Archial / Archial NORR – Debenhams



mAdRIdThe construction sector has

slowed down during 2014 and

follows the trend of the previous

years. Rehabilitation construction

work remains at 90-95% of the

levels achieved in 2009, pre GFC.

Residential activity continues to be in

the region of 80-90% of 2009 levels

and infrastructure, industrial and

office sectors are only achieving 80%

of the pre GFC activity. The trend

is positive for all sectors and are

anticipated to rise, but slowly.

Except for both the rehabilitation

and residential sectors, in aggregate

terms, construction activity is

anticipated to fall by 10 - 15% during

2014, but forecasted to grow 1-2%

in 2015. The growth in 2015 is

predicted to be seen in the residential

& rehabilitation sectors with a

stabilization in the contraction of

other sectors.

Some of the current projects under

construction include:

• BBVA Bank headquarters tower,

over 90 m high and area of

114,000m2 .

• Banco Popular Data Centre, over

50,000m2.

• Canalejas Centre Complex,

16,000m2 operated by Four

Seasons.

• ¤660 million Wanda Edificio,

España, mixed use development

consisting of hotel, offices,

commercial and residential

Housing prices continue to fall due

to high levels of housing stock and

the difficulties in obtaining finance .

Banks are currently selling their real

estate portfolios, adding to the levels

of residential stock.

The construction market remains in

a similar condition as to our previous

report, with the potential of a slight

recovery. Prices remain constant with

forecasted uplifts of 1.2% to 1.4% over

the next few years.

mANCHESTERThe North West continues to

show sustained recovery with the

residential sector the key growth

factor for the region. This has

continued to perform strongly as

private developers continue to bring

schemes to the market. Commercial

sector growth continues to be London

centric however we are seeing a

number of previously shelved retail

developments coming back on

stream in the region along with large

key developments still ongoing. The

North West continues to be the best

performing region for medical and

health projects with strong growth

expected to continue with significant

public health sector spending in the

region and its established position as

a leading research and development

hub.

The North West continues to show

tender return costs increasing

with contractors and supply chain

struggling to keep pace with

demand, there is an appreciable skills

shortage across the region and many

companies are now actively recruiting

as they gear up to meet increased

demand. Fees remain tight and with

increasing costs, project delivery

across all sectors remains challenging.

Contractors are now being far

more selective on both the types of

projects and procurement routes they

are willing to bid against meaning

that careful risk management and

procurement selection are ever more

key in successful project outcomes.

Research & Development remains

a key for the region with significant

projects such as the £65 million

University of Liverpool Material

Innovation Factory project announced

and recent completion of the £25

million City labs Development just two

of many noteworthy projects. Works

continue on the £800 million, 20 acre

mixed-use NOMA redevelopment

scheme in Manchester, this is a key

development for the city that involves

the creation of 4,000,000 ft2 of office,

residential, retail, leisure and hotel

space.

Retail development is coming back on

stream with a number of significant

schemes including the £50 million

Barons Quay Development due to

commence on site before the end

of the year. The £100 million Bolton

Wanderers backed Middlebrook

Master Plan has gained approval and

will see a new free sports academy

for up to 500 pupils built next to the

stadium, as well as 200 apartments, a

60-bed hotel and a wealth of offices

and restaurants.

Airport City Manchester remains a key

development for the region with an

£800 million cost to create a globally

connected business destination

located at Manchester Airport

with 5 million ft2. of offices, hotels,

advanced manufacturing, logistics and

warehousing.

Recovery has remained the

watchword in recent quarters whilst

there has been wider fears and

market blips on the back of poor

Eurozone growth and slowing in

global emerging economies. There is

still an entrenched belief that whilst

there may be bumps to contend with,

the construction industry is firmly

engaged in a growth phase and will

continue its recovery at least in the

near term much in line with the wider

UK economy. The IMF predicts the

UK looks set to replace France as the

second largest Eurozone Economy

and round out the year as the fastest

growing G8 economy.

Whilst the previous upward trend

in construction output looks likely

to settle to a more moderate level,

optimism in the industry remains

strong and there is still an appreciable

skills shortage across the sectors.

Many companies are now aggressively

looking to recruit and there is still

a need for the wider economy to

address key areas such as wage

growth however the UK as a whole

appears strongly placed globally and

the construction outlook remains

buoyant.



mILANThe property sector outlook in

Milan is, at best, bleak. The country,

in general, has had a difficult time

restarting after the 2008 crisis. The

construction industry has had the

opportunity to follow through, but

2014 has proven to be strenuous for

all involved parties, with company

downsizing and bankruptcies

becoming the norm for both

consultants and contractors.

There are, however, some

isolated discussions of interesting

developments in the Milan area and,

indeed, throughout the peninsula.

Opportunities include mainly retail

and hospitality projects funded by

foreign investors, as well as office

refurbishments for some international

corporations. It is doubtful, though,

that these developments will provide

enough stimulus to restart the local

construction sector as well.

The 2015 Milan EXPO is providing

some slight relief, but the bulk of the

work appears to be in the hands of

specialised international corporations,

with less trickle-down effect than

expected. Timing is tight, with initial

delays and poor initial organisation

taking its toll on the project. Pavilion

construction is being handled

mostly by international corporations

specialised in temporary facilities.

Westfield is planning a large

development in Milan, in a joint

venture with an Italian retail

developer. Westfield is vetting

various types of companies and

has started tendering the design

phase with some local professional

consultants.

General observations are leading to

the conclusion that prices are quite

unstable at the moment. The overall

conditions in the sector are leading

some to desperate measures, willing

to undercut market prices in order to

move forward until times are better,

hopefully sooner rather than later.

This results in very unstable and

erratic pricing, for which it is difficult

to predict a specific impact.

In the past, sentiment was that times

will soon improve, now it appears

that people are resigning themselves

to the fact that this downturn is more

dramatic and longer-lasting than

imagined.

mOSCOWThe political situation within Russia

is having a significant impact on the

construction industry. Projects are

being put on hold and there is no

doubt that potential foreign investors

are now not considering Russia, at

least in the short term, as a viable

location.

Currently, the only two market

sectors that seem to be stable are

the infrastructure and apartment

sectors. This is due to the

continuing population growth of

Moscow requiring new residential

accommodation either inside the

newly defined city boundaries (the

Western boundary of Moscow has

recently been extended), or in some

cases in areas outside the city.

The single biggest construction

project is the Skolkovo Innovation

Park (Russia's answer to Silicon

Valley). The development comprises

a university, a technology innovation

centre, a transportation hub, housing

on a grand scale and associated

infrastructure works.

As the Ruble continues its downward

slide, the effect on Ruble funded

projects is enormous. Most materials

are increasing more or less at the

same rate as the Ruble is devaluing.

Whereas the projects funded in Euros

or US Dollars are largely unaffected

by the situation. As far as the tender

prices are concerned it is anticipated

that there will be a short term

reduction (again in terms of Euros) as

the result of both, a reduction in the

volume of work and the reduction in

the contractor's local wages costs,

as wages have significantly reduced

when measured in Euros and of

course upward adjustments will take

much longer to filter through than

with materials. The current climate

remains highly unpredictable and

is dependent on both the political

situation and sanctions levied upon

Russia together with the terms of

trade within Russia which has been

significantly impacted by the fall in

the price of oil.



SHEffIELdActivity and optimism is increasing throughout Yorkshire however Sheffield is slightly behind other larger regional hubs. Construction costs are rising, driven by an increase in client activity as confidence is returning; this is in turn leading to greater contractor demand. This combined with a perceived skills and materials shortage means that contractors are becoming selective with the tenders they are bidding, with some only willing to negotiate or tender via a two stage approach.

An increase in client confidence is leading to an increase in tender activity. Contractors are looking more stringently at the risk profile of schemes, becoming more selective on the types of projects and procurement routes they are prepared to bid for works under. Feedback through the supply chain indicates that there may be a materials, plant and equipment shortage which could drive costs up and lengthen programme delivery.

Sheffield Hallam University and the University of Sheffield remain key players in the Sheffield market. The University of Sheffield is in the midst of an ongoing capital development programme that has seen significant investment within the city. Current key projects include Sheffield Hallam University’s £30 million “Charles Street building” and University of Sheffield’s “The Diamond” project. The Diamond, for the faculty of Engineering, will provide in excess of 10,000m2 of teaching space with a project value in excess of £80 million.

The retail sector within Sheffield is showing signs of activity. The Seven Stones city centre development lead by Sheffield City Council is beginning to gain momentum with the announcement of the councils preferred delivery partner.

As construction activity continues to rise in the region construction costs will follow suit. The current pressure is anticipated to ease in the medium to long term as skilled labour re-enters the industry after a prolonged

period of decline.

THAmES vALLEyThe Thames Valley area is starting

to show signs of recovery. There

has been increased speculative

commercial development over the

last 12 months and schemes that

were shelved during the recession

are starting to move forward again.

This is particularly the case with

residential schemes and premium

town centre office developments. The

development of two significant rail

infrastructure projects in Reading and

Maidenhead has driven the creation

of regional ‘hot spots’ with much of

the commercial development centred

on these two towns.

The education sector has also

started to generate increased

workload after a period of

stagnation with investment in

student accommodation, research

and teaching facilities being moved

forward. The region still lags behind

London in terms of its economic

recovery and there is still significant

caution in the market. Decisions

to proceed are being made over

extended timescales, with as much

risk removed or passed on as

possible.

In terms of tender price levels, the

region is feeling the full effects of the

increased construction workload in

London. The London workload, more

than work in the region, is driving

price levels. In some cases, tender

price inflation is starting to affect

the viability of some schemes with

the increase in construction costs

outstripping the increase in asset

values in the Thames Valley region.

Fee levels continue to be overly

competitive with all-encompassing

scopes of service and intensive

demands on delivery.

The increase in workload has lead

contractors to be far more selective

about the work they tender for.

Contractors are carefully reviewing

the risk profile of each project, the

contract conditions, tender process

and programme, before they commit

to participate in the tender process.

It is becoming difficult to engage

contractors in a single stage tender

and they are favouring projects

based on two stage or negotiated

processes.

The £500 million Station Hill

development in Reading town centre

is scheduled to commence in 2015

but continues to be delayed and is

now on its third planning application.

Plans for the redevelopment of

Maidenhead town centre are also

under development but timescales

remain undetermined. The University

of Reading has kicked off the

development of its Thames Valley

Science Park with the new road

infrastructure and bridge over the M4

starting on site in January 2015 and

the first phase of the 800,000 ft2.

science park scheduled to be on site

in summer 2015.

Work on residential housing

developments in the South of M4

Strategic Development zone are

set to commence in early 2015 with

Bellway Homes, David Wilson Homes

and Taylor Wimpey planning to build

in excess of 2,500 homes together

with associated infrastructure and

community facilities.

Asset prices in the Thames Valley

may not be able to sustain the

increase in construction costs as they

do in London and this may threaten

the viability of schemes outside of

the capital and see a reduction in

workload. We are already seeing

signs of this in the region. Some

domestic investors are withdrawing

from the London market in favour of

‘better value’ assets in the regions

and this may see some equilibrium

returning and a ripple of activity

outwards from London that will

support a more even distribution in

growth.



vIENNADue to the opening of the Eurasian

Economic Commission (EEC), Vienna

is one of the fastest growing capitals

in Europe. The economic situation

is better in Vienna than in the rest

of Austria and this also applies to

the construction market. The overall

mood in the economy is positive

even though unemployment ratio

is around 5%. This is an "all-time-

high" for Austria, though statistical

measurement rules have been

changed within the last years.

"Seestadt Aspern" is the most

significant project currently in

Vienna; the old airport of Aspern in

the northeast of Vienna is becoming

a new residential district and will

contain about 10.500 apartments

when the development is finished.

The new Central Station has opened

and a new hospital "Krankenhaus

Nord" is under construction.

The general recession still effects

Austria except for the Viennese

construction market. Some regions

in Austria are still providing loan

programs for the refurbishment of

residential buildings. This economic

stimulus package for residential

buildings, as well as the thermal

retrofit of dwelling units are very

important for Austrian general

contracting KMU´s (small and middle

sized construction companies).

The growth of superstructure

industries is about 3.3%, however

the infrastructure sector suffers

from a decreasing number of big

infrastructure projects. Brenner

Basis Tunnel is under construction

and full project speed will probably

be reached in two or three years

however it is currently “on track”.

WELWyN gARdEN CITyThe region is now feeling the full

effects of the increased construction

market activity from London and is

starting to see increased construction

activity in a wide range of sectors.

In particular, housing projects have

seen significant growth, particularly

in areas of the popular London

commuter belt as local councils are

opening up land for development to

meet their new housing obligations.

Economic hubs, such as Cambridge,

have seen a significant increase in

the amount of speculative buildings

being constructed, in particular office

accommodation as the green light to

begin speculative investment again.

Generally, it has been witnessed that

growth in the food retail sector is

showing signs of slowing down from

previous periods of growth, but non-

food retail continues to grow with

evidence of major developers and

retailers in the retail sector looking to

spend significantly over the next few

years.

The heightened market activity,

primarily spilling outwards from

the London growth, has seen

procurement options available being

reduced to clients, with a significant

number of contractors unwilling to

competitively tender under single

stage procurement routes. The

primary reason for this is estimating

resources and increased general

workload of contractors. Works on

site have been impacted by increased

lead in periods on key materials, in

particular bricks and façade materials

generally and shortages of skilled and

unskilled labour.

There appears to be an increasing

pipeline of key projects in the local

education sectors, with a local

education college indicating that a

significant amount of land will be

sold for housing. The proceeds of the

sale going towards significant master

planning of the existing campus. In

addition to this, local universities

Essex and Hertfordshire continue to

expand and refurbish their existing

facilities.

Significant interest has been sparked

with the proposals for the Welwyn

Garden City Master plan which will

see 750 new homes created over a

20 acre town centre site, alongside

retail and community assets.

Whilst still going through public

consultation, should the project be

approved, it will represent a large

boost to the local economy generally,

as well as stimulate further growth in

the construction market.

Given the general increase in

construction activity in the region,

coupled with the shortages in

materials and labour, the local market

has seen significant price increases in

the period. It is expected to continue

to do so in line with the continued

growth in the London market, albeit

with a slight lag effect.

Institute of Diplomatic Studies and Consular Affairs, KSA

Architect: Henning Larsen


Oil prices have fallen by more than 50% since june 2014. In November 2014, the Organization of the Petroleum Exporting Countries (OPEC) declared that member countries would not cut production in the short term. Markets have forecasted oil prices to be around US$60 -70 per barrel on average in 2015 (a decline of about 40 percent from june 2014 levels) before rising gradually to US$72 per barrel by 2019. Oil prices are expected to partially recover over the medium term because of the likely decline in investment and future capacity growth in the oil sector in response to lower oil prices.

Forecasted GDP within the region remained strong during 2014 at 3.0% up from 2.3% in 2013. GDP growth for 2015 & 2016 is predicted to fall slightly due to the fall in oil export prices. The Gulf States GDP is forecasted to be 3.4% in 2015, a reduction of 100 basis points (bps) from that forecasted by the IMF in September. For other oil exporters in the region, a fall of 70 bps is predicted.

MARKET INTELLIGENCE

MIDDLE EAST& NORTH AFRICA

Growth of 0.3% during 2014 was seen for the developing oil exporting countries including Algeria, Iran, Iraq, Libya, Syria and Yemen, with GDP rising to 2.4% in 2016.

Oil production and continuing conflicts in the area will determine the stability of the forecasts in the short term. Regional OPEC oil producers are not expected to cut oil production under baseline projections, but as production levels are maintained it may suggest that any sizeable lift in oil pricing may not be seen in the short term. Countries that are presently in conflict (Iraq, Libya and Yemen) or facing difficult external trading environments (Iran) could also suffer from declining oil production and/or face downside risks from conflict-induced disruptions in non-oil economic activity impacting on the Region’s GDP forecasts.

Across both the developed and developing parts of the region increased spending on infrastructure is helping to offset the recent volatility of oil prices. Construction either underway or planned is inclusive of some large

mIddLE EAST CONSTRuCTION COST RELATIvITIES

Q1, 2015

DOHA 111

AbU DHAbI 106

DUbAI 105

RIYADH 104

NUMBER OF CITIES

2

1

0

3

4

GROWTH DECLINE


RLB CONSTRuCTION mARKET ACTIvITy mOdELmIddLE EAST - gROWTH SECTORS vS dECLINE SECTORS

infrastructure projects across the region. In Algeria, Egypt, jordan, Kuwait further investment in power and water assets are being seen, while others in the region are in the midst of seeking to upgrade outdated infrastructure in the developing economies.

Approximately US$180 billion of contracts for new construction projects are forecast to be awarded in the Gulf States during 2014, the highest amount for six years, despite falling oil prices, according to MEED Projects. The concern for the construction industry is that oil prices could drop for an extended period below the "break-even" levels which may cause governments to balance their budgets and reduce infrastructure and new development spending.


COuNTRy 2014% 2015% 2016%

AFGHANISTAN, REP. OF 3.24 4.49 5.03

ALGERIA 3.84 3.99 3.83

bAHRAIN 3.88 2.95 3.11

DjIbOUTI 5.50 5.55 6.00

EGYPT 2.20 3.50 3.85

IRAN, I.R. OF 1.46 2.20 2.23

IRAQ (2.66) 1.46 7.62

jORDAN 3.50 4.00 4.50

KUWAIT 1.39 1.79 1.83

LEbANON 1.75 2.50 4.00

LIbYA (19.78) 15.00 18.28

MAURITANIA 6.80 6.75 6.69

MOROCCO 3.51 4.72 5.05

OMAN 3.40 3.41 3.60

PAKISTAN 4.14 4.30 4.40

QATAR 6.53 7.70 7.82

SAUDI ARAbIA 4.60 4.46 4.39

SUDAN 3.03 3.71 4.57

SYRIAN ARAb REPUbLIC N/A N/A N/A

TUNISIA 2.80 3.70 4.50

UNITED ARAb EMIRATES 4.28 4.50 4.44

WEST bANK AND GAzA NOT LINKED

NOT LINKED

NOT LINKED

YEMEN 1.91 4.58 4.68

The Address Residence Fountain Views, Dubai, UAE

Architect: Dewan for FV1 and FV2 (Left and Right Residential Towers) and Atkins are for FV3 (Middle Tower – Hotel)

Location inteLLigenceMiddle east & North africa


ABu dHABIAbu Dhabi has recorded overall

steady growth in the second half

of 2014 as all market sectors are

going through a recovery phase

and showing positive signs since

the economic crisis. The Abu Dhabi

Airport recorded an increase of 15%

in visitors compared to 2013 which is

encouraging.

A number of significant projects are

keeping the construction market

buoyant such as the Abu Dhabi

International Airport a part of the

governments “Plan Abu Dhabi 2030”.

The building will be constructed using

approximately 69,000 tons of steel,

more than 680,000m3 of concrete,

and nearly 500,000m2 of steel and

glass cladding, 135,000 tons of rebar,

360,000m2 of suspended ceilings and

325,000m2 of natural stone flooring.

Also adjacent to Abu Dhabi city is

the Yas Island Development. Already

home to significant development it

continues to provide construction

activity to complete or add to some

world-class leisure an entertainment

attractions including a world-class

motor sports racetrack, the Ferrari

World Abu Dhabi theme park, and

a water park. In addition to these

attractions, the island is home to

300,000 square meters of retail

space, parkland golf courses, lagoon

hotels, marinas, apartments and villas.

Many more projects in Abu Dhabi

support the current and forecast

growth figures for Abu Dhabi such

as Capital District City, Khalifa Port &

Industrial Zone, Al Falah Community

Development, Le Louvre Museum,

Masdar City, Saadiyat Island Museums

and other infrastructure projects.

The second half of 2014 has shown

strong market confidence which

will instigate a sustained period of

developments with multiple new

projects to be awarded. The TPI’s

are forecast to increase in 2015 and

2016 in line with current and planned

construction activity for Abu Dhabi.

dOHA

The second half of 2014 is seeing

steady economic growth driven

by the continued expansion of the

non-hydrocarbon economy and

infrastructure investment. Economic

diversification is growing and, along

with the continued plans associated

with the National Vision of 2030.

Government investment is beginning

to materialize and set off new

projects on the infrastructure level

as well as education and healthcare.

With the new Hamad International

Airport opening, the increased

number of visitors to Qatar, along

with the continued rising population

growth, has resulted in noticeable

economic growth in the second half

of this year. This however has also

seen an increase in the cost of living.

Projects for Doha can be seen at

Doha Metro, Doha Education City

and Doha Festival City. In preparation

for the 2022 World Cup stadium

construction is moving ahead at Fifa

2022 World Cup Stadium, Lusail

Iconic Solar Stadium, Al Wakrah

Stadium and Al Gharafa Stadium.

The Qatar National Museum in also

underway.

With the 2022 World Cup and the

National 2030 Vision, the Qatari

Government is investing heavily in

infrastructure such as roads, Doha

Metro, rail, drainage and sanitation

projects. Other sectors currently

seeing significant activity include

health, education, hospitality and

retail sectors. Although there remains

steady activity across all sectors, the

rate of growth in new opportunities

outside of infrastructure appears to

have stabilised. This is potentially

due to the ongoing rationalisation

of policy driven projects as the

local authorities begin to undertake

the necessary prioritisation of key

investments prior to 2022. Prices

currently remain reasonably stable

due to ongoing high competition but

an increase is forecasted for the year

to come as pressure on resources

begins to make a more noticeable

impact.

duBAIA positive increase in sentiment with

the award of the 2020 Expo to Dubai

as well as the perception of Dubai

as an investor friendly safe haven

has seen property prices and rentals

increase markedly. This has also seen

an increase in the cost of living. The

resultant development boom has

seen a swath of new projects and

mega projects being announced with

all major developers trying to get to

market as soon as possible in order to

secure competitive tenders and lock

in contractors.

Significant projects include

Bluewater’s Island, centred on the

Dubai Island, the development

includes retail, residential, hospitality

and infrastructure together with

a 260m high ferris wheel. Dubai

Airport’s Maktoum International

project is said to become the largest

airport in the world and capable of

accommodating up to 200 million

passengers a year.

Other significant projects include:

• City Walk, a large mixed use and

retail development,

• La Mer, a leisure, housing and

hospitality development,

• Downtown, centred on the Burj

Khalifa, a number of mega projects

are ongoing including Fountain

Views

• Dubai Opera House, and

• AKOYA Oxygen, housing project

and golf courses, including

approximately 13,000 units.

With the increased sentiment and

the number of projects and mega

projects noted above, prices are

expected to continue to ramp

up as the competition for staff,

management personnel and materials

increases. Current market forecasts

as reflect an annual increase of 4.7%

in 2015, 5.7% in 2016 and up to 6.1%

by 2017.

ASB North Wharf, Auckland, New Zealand

Architect: Bligh Voller Nield and Jasmax


In 2014, the Australian economy grew at 2.9%, a small amount below trend and the New zealand economy grew at 3.6%. Despite large falls in Australian mining investment in the year, rising resource exports meant that growth of mining activity overall, remained high. Growth of non-mining activity remained below its long-run average, but picked up owing to stronger growth in dwelling investment and public demand and a small rise in consumption growth. Non-mining business investment remained subdued. Falling export commodity prices in Australia are having a detrimental effect on revenues but the fall in the Australian Dollar and oil pricing is assisting this shortfall.

Within New zealand, the economy is still strong. Investment is likely to remain a strong driver of growth during 2015, with consumption solid in support. The pace of growth in New zealand’s economy will remain firm through 2015. The ecomomy is seeing falling unemployment, a slight lift in wages growth, but

MARKET INTELLIGENCE

OCEANIA continuing low inflation as falling dairy incomes and potential El Nino affect are being offset by strong construction growth, rising housing prices and strong net immigration. GDP forecasts are predicting domestic economic growth will ease during 2015 but still remain robust culminating in a forecasted GDP of just under 3%.

In Australia, construction work yet to be done in the non-residential building sector remains elevated and should support investment in the near term. Forward-looking indicators, such as non-residential building approvals, have weakened over the course of this year, implying that there is less growth in prospect in this sector than previously expected. Residential construction is still very strong all around the country

Forecasts for Australian GDP growth are expected to be below trend over 2015 and 2016, remaining at the 3% mark.

RLB CONSTRuCTION mARKET ACTIvITy mOdELOCEANIA - gROWTH SECTORS vS dECLINE SECTORS

NUMBER OF CITIES

6

2

4

0

8

10

12

GROWTH DECLINE


OCEANIA CONSTRuCTION COST RELATIvITIES

Q1, 2015

DARWIN 127

SYDNEY 120

PERTH 119

CANbERRA 116

MELbOURNE 113

CHRISTCHURCH 111

ADELAIDE 110

WELLINGTON 107

TOWNSVILLE 106

AUCKLAND 99

bRISbANE 96


COuNTRy 2014% 2015% 2016%

AUSTRALIA 2.82 2.90 3.01

NEW zEALAND 3.60 2.84 2.45

PACIFIC ISLAND COUNTRIES AND OTHER SMALL STATES

NOT LINKED

NOT LINKED

NOT LINKED

Pacific Island countries and other small states include bhutan, Fiji, Kiribati, Maldives, Marshall Islands, Micronesia, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu, and Vanuatu.

LOCATION INTELLIGENCEOCEANIA


AdELAIdEThe tender market still continues to

be very flat. There is a limited number

of new projects being generated from

both the private and public sectors to

feed the trade and head contractor

market within Adelaide. We have

seen some signs of larger contractors

pricing smaller projects to ensure that

they maintain some work into the

new year – with some limited success.

Tertiary Institutions remain active

with large projects being tendered

to Tier 1 Contractors. There are signs

of the retail sector improving which

will provide new projects during 2015

including the ALDI Stores roll out.

Major projects that are expected to

help lift the market include:

• Adelaide University Clinical School

($230 million)

• University SA Health Innovation

Building ($200 million)

• Sky City Casino ($300 million)

• University SA Great Hall

($50 million)

• Courts Precinct ($550 million)

All trade contractors continue to

remain very competitive and activity

seeking work.

Many trade contractors continue

to fall into administration - recent

casualties include a mid-sized

electrical contractor and a medium to

large sized concreter during Q4 2014.

For the short and medium term, the

market continues to be difficult for

trade contractors.

Non-residential construction activity

has increased over the year and has

highlighted capacity issues within

the industry with long lead times for

off-site prefabricated products and

labour shortages on structural trades.

This is of concern given that whilst

construction activity has increased,

the current volume of work is not

yet significant. There is promise of a

number of large scale construction

projects in Auckland and the amount

of projects in for building consents

has grown strongly. With this

potential volume of work along with

other significant construction projects

in Christchurch, then there will likely

be industry capacity issues requiring

significant industry investment. Key

projects in the planning for Auckland

in the short to medium term include

the proposed new International

Convention Centre, the Precinct

Downtown redevelopment and the

City Rail Loop.

The increased construction

activity has seen an increase in

main contractor margins and

subcontractor pricing including

increased labour costs. Particularly

in the structural trades which are

experiencing high demand. Should

construction activity continue to

grow as expected then we will see

a volatile market and tender prices.

Going forward construction cost

escalation will need to be considered

as a key risk element of project

feasibility models.

AuCKLANdThe New Zealand economic recovery

continues to strengthen and

broaden across the regions after

being concentrated in Canterbury

and Auckland in the last couple of

years. The Reserve Bank of New

Zealand raised interest rates earlier

in the year in an attempt to cool

the Auckland housing market whilst

the New Zealand dollar appears to

have peaked from historical highs.

Generally business confidence is high

with optimism in hiring, investment

and increasing margins and profits.

Despite interest rate rises the

Auckland housing market remains

strong. The central government has

set a target of 39,000 new homes in

Auckland over the next three years

and residential building activity is

increasing including apartments and

retirement homes. This increased

level of activity is affecting resource

and supply chain capacity and is

ultimately increasing labour and

material costs.

The strong residential market

and demand has provided strong

work flows through the civil and

infrastructure sectors with new land

zoning opening up areas of new

residential development. Particularly

in the North West and South of

Auckland where new Town Centres

such as Westgate and Ormiston are

being developed.

Location inteLLigenceOceania


BRISBANEThe sharp decline in commodity prices is likely to have a significant effect on the State budget for 2014/15 and future budgets. In 2013/14 Gross State Product was 2.3% compared to the budget forecast of 3%. In addition the upcoming State budget is likely to result in a reduced level of Government activity during the caretaker period and during the post-election period. The major issue for the election is the Governments Strong Choices proposal to lease State assets to the private sector.

Positive indicators are an increase in the ANZ Job Ads survey that has risen for 6 consecutive months indicting sustained strength in the jobs market. The international trade balance has also increased by 5% in October 2014 but is still negative $1.55 billion. This can be expected to improve dramatically as the LNG exports increase in 2015.

Housing finance continued to increase in 3Q 2013 however construction work on buildings fell by 7.4% in the same period. Retail trade increased 1.4% in the period ending October 2014.

Market sentiment remains positive particularly in the residential, retail and industrial sectors. The key indicator is population growth that continues increase with 1.5% (70,500) growth in the year ending June 2014. Significant house price differential between Brisbane, Sydney and Melbourne and an increase in overseas migrants are major factors in this trend. There remains strong interest from overseas developers and investors in the South-East Queensland market.

CANBERRAA recent OECD report has ranked Canberra as the world's most liveable city. The continued development of award winning projects like New Acton, visionary infrastructure such as the Capital Metro and significant investments in federal office accommodation, health and education over the years have laid the foundations for a vibrant city ready for new opportunities and growth as the region approaches its coming of age with the ACT celebrating 21 years of self-government in 2015.

The long term outlook for Canberra is promising, however, in the short to medium term, market sentiment is still subdued with the impact of consecutive federal budgets cuts continuing to affect confidence. Projections for employment growth and final demand remains below long term trends.

The ACT Government has announced a mass buy back scheme for homes affected by loose asbestos insulation fill. A previous clean up in the 1980s failed to remove all traces of asbestos leaving no other option than full demolition of the 1,021 affected properties. The buyback scheme, underpinned by a $1 billion federal government loan, is expected to leave a shortfall of $300 million in the ACT Government accounts. One major effect of this is that many ambitious capital works programs such as the City to Lake are unlikely to be realised within previously reported time frames.

Major projects recently announced are the Department of Social Services new offices in Tuggeranong providing

a net lettable area of 38,000m2 and the recent tender for leased office accommodation for the Department of Immigration and Border Protection

to provide 80,000m2 NLA of office accommodation. There has also been a strong response to the new ACT Government Offices project with 11 developers registering their interest to

develop 42,000m2 of office space

As the construction industry welcomes a New Year we expect confidence to slowly recover and forecast a rise in the tender price index line with inflation for 2015 of 2.5%.

The retail sector continues to perform strongly with four major projects in South-East Queensland under construction and further projects planned for commencement in 2015. The commercial market remains subdued but the longer term prospects remain strong. The residential market continues to grow with a number of major projects underway or about to commence including the Flat Iron project in Fortitude Valley, 300 George Street, the Commonwealth Games Village and Jewel on the Gold Coast.

The Government has released details for the two bids for the redevelopment of the Queens Wharf precinct which will re-vitalise this area of the CBD with both bids offering an integrated resort incorporating hotels, casino, apartments and a retail precinct. A final decision on the preferred bidder is likely in early 2015.

The market remains competitive however increased costs have been experienced in particular trades in particular, mechanical Services, formwork and tiling. This is the result of limited resources and limited sub-contractors in these trades to meet the increasing workload.

Construction costs in 2015 will be dependent on the timing of the commencement of major projects currently being planned and marketed however we expect construction volumes to increase through 2015 putting upward pressure on construction costs.

LOCATION INTELLIGENCEOCEANIA


CHRISTCHuRCHThe post-earthquake Canterbury

rebuild has continued to gain

momentum with the CBD skyline

noticeably busier over the last period

with the number of cranes engaged

in new commercial construction.

July 2014 non-residential consents

were $154 million, once again the

highest in New Zealand. Residential

construction, while moving slower

than expected is continuing strongly

(July residential consents were 20%

ahead of the same period in 2013).

There is some month on month

volatility but the overall trend is still

one of strong growth across both

sectors.

Unemployment in Canterbury remains

the lowest in New Zealand at 3.8%.

The total number of people employed

in Christchurch has grown by nearly

6% since 2013. Most of the current

cost increases in Canterbury are from

labour cost inflation although some

subcontract and supplier margins

are also increasing and affecting

tender prices on major and complex

projects.

The Burwood Hospital redevelopment

is around 30% through construction

while the Christchurch Hospital

redevelopment is beginning early

earthworks and enabling works ahead

of main contract commencement

by the middle of 2015. The Justice

Precinct project is now rising in the

CBD and a number of commercial

office and retail projects are also

underway in the city centre. The Bus

Interchange project has commenced

and both Canterbury and Lincoln

Universities have extensive building

programmes planned.

Escalation forecasts are complex

and uncertain at present and have

a number of variables depending

on project size and type and

as such should be taken as an

average. Overseas contractors and

subcontractors have begun to see

some success in securing contracts in

recent months.

dARWINDeveloping the North is the key

theme of the NT Government

in conjunction with the Federal

Government with a number of

initiatives through all sectors of

the NT economy being explored.

The infrastructure sector including

oil, gas, mining, roads and services

infrastructure including ports, is being

examined with a view to ensuring

these are adequate or require major

investment to enable the theme to be

implemented.

Land is being released for housing

in a bid to lower the cost of housing

in Darwin and surrounding areas, a

key driver in getting the cost of living

down and improving NT business

competitiveness in the face of

growing interstate and international

competition.

The current positive economic

environment is still heavily influenced

by the INPEX gas project which is

under full construction and providing

a number of positive outcomes and

spin-offs for those local businesses

that can benefit from such a project.

The INPEX gas project was the

primary focus of construction and

engineering activity in the Top End in

2014 and likely to remain so in 2015. A

number of construction projects were

in the feasibility phase in 2014 after

the increased onsite construction

activity experienced in 2013. A

number of projects are earmarked for

start in 2015 mainly in the apartments

and hospitality sectors. Industrial

activity will continue in earnest as

will other sectors such as health and

education with slower activity in retail

and commercial office markets.

The construction market is still very

competitive with a number of bidders

vying for the few projects on offer. A

number of owner developer builders

are seeking to lock in prices for

projects due to start in 2015 given

the current competitive nature of

the market. As more projects come

on line we predict a rise in the order

of 4% for the calendar year in 2015,

potentially easing thereafter once

work on the INPEX project tapers off.



mELBOuRNEVictoria’s economic growth has

performed strongly over the past

twelve months, despite not being

heavily reliant on the resources

sector. Since 2009, Victoria’s Gross

State Product (GSP) has grown at an

average of 3%. Driven by growth in

the services, warehousing and freight

sectors, Victoria have repositioned

its employment base away from

manufacturing towards health,

education, finance and business

consulting services.

Increased investment in infrastructure

has been a significant driver of

industrial capacity growth for

the Victorian economy. Victoria’s

transport infrastructure program

of up to $24 billion of new projects

has generated jobs, from office-

based engineering and design roles

to onsite road works and building

and construction jobs, plus the small

businesses that support them.

Victoria’s population is growing at

near record rates, driving higher

levels of economic growth. This will

help to support demand for housing.

A high level of new dwelling supply

in the pipeline (mainly in the form of

apartment completions) is likely to

tip the market into oversupply from

2015/16, causing vacancy rates to rise.

Commercial real estate ownership

is changing within Melbourne. The

displacement is occurring as private

investors, typically one of the

largest group of investors in prime

grade assets in Melbourne, were

net sellers of assets, during 2014,

which were taken up by institutions.

Since 2004, Melbourne has added

more than 900,000m2 of new office

supply. Despite the strong pipeline

of development during this period,

vacancies averaged only 6.9%.

The Melbourne construction

market is still in positive territory.

Pricing is starting to increase in

the structure, finishes and façade

trades. Competition is holding prices

relatively steady but escalation of

2.5% is forecasted for 2015.

PERTHAlthough the Western Australian

economy, with the engineering

sector in particular, is experiencing

some "post resources boom blues",

it is nevertheless showing resilience

across many other sectors of the

construction market. The leadership

shown by the State Government in

initiating a number of projects to

release and 'create' land immediately

adjacent to the CBD has provided

development opportunities and

enticed major players to invest in

Perth.

Reclaiming the area over the railway

approaches to the main Perth rail

station has resulted in Perth City Link

development zone.

The Elizabeth Quays development

has unlocked a number of major sites

and will in future become home to

the new Chevron office tower and

Ritz Carlton hotel.

The reclamation of land alongside

the causeway at East Perth has

created further opportunities at

'Water bank' and will provide Lend

Lease, the incumbent developer, with

extensive opportunities for mixed

used development over the next 5 to

10 years.

From a counter perspective, the

office vacancy rate has continued

to climb and is now at levels not

seen for at least a decade and

will effectively dampen interest in

speculative office development

although a number of pre-committed

office projects will proceed.

The Perth construction market

continues to be demand driven with

keen pricing at virtually every level

and particularly fierce competition

in the low to mid-range commercial

projects. However, increased activity

in the housing sector has led to some

shortage of supply, particularly in

the brickwork trade and it is possible

there may be some emerging price

pressures in this and other selected

trades.

Liberty Place, Sydney, Australia

Architect: Francis-Jones Morehen Thorp



SydNEyRecent National Accounts statistics

reported New South Wales had the

second highest growth in GDP for the

Q3 2014 recording a 3% increase from

the Q3 2013 statistics. A factor in the

improvement of GDP has been the

strong performance of the building

sector.

An analysis of Australia Bureau of

Statistics construction work done

reports an 18% increase in building

works for Q3 2014 compared to Q3

2013. Overall construction activity has

increased 6% for the similar period.

Whilst activity over twelve months

has recorded increases, activity on

a quarter by quarter basis reported

a fall of 1% from Q2 2014 to Q3

2014. This fall is attributed to a 13%

reduction of engineering activity.

The strength of building activity in

New South Wales follows from the

higher levels of building approvals

that had been recorded in the past

two years. Residential building

approvals continue to be the sector

that indicates continuing activity and

increased opportunities. However

it is difficult to confirm anticipated

trends as values and the number of

approvals for the residential sector

varies on a month to month basis.

Developers report demand for multi-

unit development continues to be

strong for pre sales. In particular,

areas of high demand are sold out

within hours of entering the market.

A recent analysis of the RLB Crane

Index confirms the strength of

residential activity by the majority of

tower cranes erected in Sydney are

operating on residential sites. The use

of tower cranes across the Sydney

metropolitan area confirms the

changes in methods of construction

requiring the use of tower cranes

to take advantage of pre-fabricated

components and maximise materials

handling methods in order to achieve

reduced construction durations.

Whilst approvals and activity in the

non-residential sector is increasing,

the rate of increase is much lower

than the residential sector at about

a 1% increase over a twelve month

period. Current forecasts predict this

trend to continue.

Despite increased activity materials

price rises have been very stable

over the last half of the year. The

most significant price increase in this

period has been plasterboard supply

recording a 6% price increase.

Contractors are reporting that sub-

contract pricing continues to record

large spreads between highest and

lowest prices. It is believed that such

differences are attributed to sub-

contractor workload. Contractors,

operating on major residential multi-

unit projects, have reported price

rises for selected structural and

services trades that are well above

expectations. Subcontractors and

contractors continue to be risk averse

on projects where perceived risk

will impact upon possible margins.

Such projects are attracting a price

premium and a reduced number of

interested contractors.

During 2014 the Sydney building

industry has experienced levels of

confidence resulting in an increased

investment in staffing levels, plant

and equipment and in some cases

selective tendering in order to

achieve an increased return on

investment. However, whilst there

is increased confidence and greater

opportunities for continued workload,

competition to secure projects has

not diminished. Contractors report

that to secure work significant

discounting of prices is required.

Such competition is likely to see price

rises limited to 3% for 2014. However,

the outlook for 2015 remains positive

as the continued strength in the

residential sector could see prices

increase up to 4.5% for 2015 which is

the highest level for price rises since

2008.

WELLINgTONLocal construction trends

remain weak in terms of new

developments, in both the

commercial and residential markets.

Civil infrastructure projects

are progressing well north of

Wellington and will continue to

provide employment for some time.

Strengthening of existing buildings

still remains high on the priority list

locally but is not adding value to

the cityscape or local economy. This

needs to change if we are to move

forward like other centres within New

Zealand, but there are no real signs of

this on the horizon.

There are a few larger projects due to

start in the New Year. These include

the Gateway project and Rutherford

House extensions for Victoria

University, Transmission Gully and the

major civil road works on the Kapiti

Coast as well as the potential Hilton

Hotel and Convention Centre. These

projects will soak up a large portion

of the contracting resources and

provide much needed impetus to the

local industry, and hopefully kick-start

a number of other developments in

our region.

We are beginning to see some cost

escalation come through from the

market, being led by material supply

price increases on the back of the

burgeoning markets in Auckland and

Christchurch. Whilst this escalation is

having an impact on certain trades,

it is not reflecting in large increases

on a project level as not all material

groups are affected. Labour costs

remain in a holding pattern and we

are still seeing resources moving to

pick up work in other centres. It is

likely that we will see further upward

pressure on prices in 2015/16 on the

back of new projects due to start,

but the market here remains well

behind the other major centres in the

country.

Instant cost data on the spot

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