The Rider Levett Bucknall (RLB) 4th Quarter 2018 International Report confirms labour shortages have been highlighted as a growing concern within RLB offices in developed countries.
Stephen Mee, RLB’s Global Chairman said, ‘Over the past 20 years, employment trends for the construction industry in these regions illustrate a workforce that is ageing. The need to engage, train and retain skilled workers within the industry has intensified.’
Workers over 55 increasing as young workers decreasing
According to RLB’s latest International Report, Canada experienced the most dramatic shift in their construction workforce composition, with the percentage of workers aged 55 and over almost doubling between 1994 and 2017, while the percentage of younger workers, aged 15 to 24, has remained constant.
Government intervention is also causing concerns with uncertainty surrounding the impact of US immigration policies on the US construction workforce and the impact UK’s Brexit will have on the potential workforce repatriation back to the EU from the UK.
Higher cost escalation forecast for 2019
Stephen continued, ‘Construction cost escalation across the globe for 2018 is forecast to be higher than 2017 uplifts according to 33 of the 64 RLB offices surveyed. Forecasts for 2019 indicate 46% of offices are predicting a lowering of TPI annual uplifts from levels forecast for 2018.’
He added, ‘Within Africa annual TPI changes are mixed, with Cape Town and Johannesburg
forecasting lower rates in 2018 than the previous year, while across the Middle East strong activity continues to see Doha’s costs rising for 2018.’
North Asia is seeing mixed forecasts with construction deflation being anticipated in Hong Kong and Macau for 2018. Mainland China cities are anticipating mixed results with Chengdu and Shenzhen forecasting more than a doubling of the 2017 TPI movement and Beijing and Shanghai construction cost movement being cut by 50%.
Singapore clawing its way back
Economic optimism is pushing construction prices higher in the Philippines with significant increases from 2017 levels being seen in the key centres for 2018. Singapore is clawing its way back into positive cost escalation territory after experiencing construction cost deflation for 2016 and 2017.
Sydney and Melbourne forecasting highest annual rates
Australian cities are split with 56% anticipating higher escalation for 2018 and 33% lower. Demand pressure is seeing Sydney and Melbourne forecasting the highest annual rates for 2018 within the country.
In New Zealand, strong volumes of construction work through 2018 are fueling construction cost rises, with Auckland anticipating 6% for 2018.
Forecasts for 2019 indicate that North American TPI uplifts will be lower in 2019 than 2018. Chicago, Phoenix and San Francisco are all forecasting annual TPI rates higher than 6% for 2018.
Uncertainty surrounds impact of Brexit in the UK
Uncertainty surrounding the impact of Brexit within the United Kingdom is impacting annual TPI rates for 2018. UK regions are predicting lower rates of construction escalation for 2018 (except Bristol) with Leeds and Sheffield forecast to experience construction cost deflation during 2018.
Within Ireland and Mainland Europe annual TPI movements are running at two speeds. Budapest and Dublin are running at levels above 7% for 2018 and 2019, whereas most other cities are seeing annual TPI movements for 2018 between 0% and 2%.
European and American cities still dominate
European and American cities continue to dominate the RLB Global Construction Cost Relativity Index ‘Index’. Of the 49 cities currently forming the index, 22 cities retained their ranking, 15 rose and 12 fell. Oslo, San Francisco and New York still retain their positions as the most expensive cities to build.
Macau, Perth and Hong Kong record falls
Stephen concluded, ‘The biggest movement for the current Index is Macau, which has seen its ranking fall by seven places due to three years of negligible construction cost increases. Other significant cities to record a fall in their ranking include Perth and Hong Kong as both have had three years of minimal construction cost increases due to falls in building activity.’