London has been ranked as the fifth most expensive city in the world to build in, according to a report from consultancy Turner and Townsend.
The report also found that construction costs will rise by 2.8% in 2018, albeit at a lower rate than the 3.9% increase noted in 2017.
Construction costs in the UK’s capital are a massive 27.7% higher than the national average, although the study found that costs have risen by 3.1% across the country.
A key driver behind the ongoing increase in building costs in the UK is an acute skills shortage that ensures ‘workers continue to command a premium’.
Steve McGuckin, global head of client programmes at Turner and Townsend, said: “In the UK the skills challenge continues to contribute to cost inflation.
“We need to adopt digital tools, modern manufacturing methods and automation if we are to ease the pressure on resources and help attract new talent to our dynamic sector.
“We need a fundamental shake up of the industry model to incentivise this investment, otherwise there is every excuse not to change.”
New York City remains the most expensive city in the world to build in, followed by San Francisco, Hong Kong and Zurich.