NY, SF Top Global List for Costly Construction

New York City has claimed the title of the world’s most expensive place to build, with San Francisco following close behind, according to UK-based consultancy Turner & Townsend’s 2025 cost index ranking.

The annual report evaluated construction markets in 99 cities worldwide, revealing that five U.S. cities made the top ten: New York, San Francisco, Los Angeles, Chicago and Philadelphia. The list also includes Geneva, London, Sapporo, Tokyo and Zurich.

Cities are ranked by the average cost of construction per square metre.

A shortage of skilled labor is driving up building costs across the United States, Turner & Townsend says. “87% of markets there report shortages of mechanical, engineering and plumbing professionals,” the firm noted in its latest analysis.

Relative economic stability and steady demand continue to push up prices in Switzerland and the UK, while Japan’s booming data center and high-tech sectors support its positive outlook.

“Whether businesses are making tactical moves to reorient supply chains, or pivot to invest in high-growth sectors like defence, advanced manufacturing and data centres – construction remains crucial to global resilience and growth,” said Neil Bullen, Turner & Townsend’s managing director of real estate.

He also warned that labor shortages could pose a threat to future growth. “Despite signs of increasing price stability and renewed activity in construction, we’re seeing a worldwide skills shortage that could put the brakes on growth. International labour could become less mobile as barriers to migration emerge, further adding to long-term dwindling of talent pools,” Bullen added.

To adapt, Bullen said, “Clients need to try new approaches; from the foundational – investing more heavily in training local skills – to the innovative, such as piloting new AI tools or integrating digital solutions across the lifecycle of a project.”

In contrast, countries like Vietnam, India, and Malaysia continue to see strong demand for construction while maintaining comparatively lower building costs, largely due to abundant labor and expanding manufacturing bases.

Impact on Developers and Investors

‍The high costs in cities like New York and San Francisco mean tighter profit margins for developers and more pressure to adopt cost-saving technologies and procurement strategies. Large firms are increasingly looking at prefabrication, modular building, and AI-enabled project management to counter labor shortages and escalating material costs.

Potential for Policy Response

‍Experts say local governments may need to respond with incentives to train more skilled tradespeople and lower barriers for skilled immigration. In the U.S., industry groups continue to push for expanded apprenticeship programs and reforms to ease workforce bottlenecks.

Outlook for 2025 and Beyond

‍While some markets are seeing early signs of price stability, Turner & Townsend’s forecast suggests that without new talent pipelines or digital efficiencies, high-cost cities could see continued upward pressure — a challenge for public infrastructure and private development alike.

Originally reported by Joe Quirke in Global Construction Review.