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London: Global construction costs are set to rise by up to 7% in 2025.
The boom in key sectors, such as digital infrastructure and renewable energy, offers obvious opportunities for growth. But the industry still faces geo-political and economic uncertainty, which will continue to disrupt supply chains and increase prices.
The findings are captured in Building a resilient future: Adapting to uncertainty in 2025, a new report published by Currie & Brown, a world-leading provider of cost management, project management and advisory services.
There will be significant growth and opportunities across the Middle East, driven by government-led investment in infrastructure and nationally important transformative projects. However, rising demand will add pressure to the limited availability of skilled labour and key materials, leading to price increases. UAE construction costs are expected to rise between 2-5% and KSA construction costs to rise between 5-7% on average in 2025.
According to the report, costs will rise across all regions and most markets, driven by a shared set of factors:
Economic uncertainty
Despite a levelling off of inflation and the stabilisation of interest rates, growing protectionism, political volatility, and conflicts in various parts of the world make for an unsettled and unpredictable outlook. These factors will continue to put pressure on the cost and supply of materials and labour.
The digital technology revolution
The rapid and inexorable evolution of digital technology in general, and AI in particular, will continue to transform industries worldwide. It will create opportunities for growth. But that growth will also generate intense competition for scarce and specialised materials (notably for projects in the technology sector), adding significantly to global construction costs.
Labour shortages
The chronic lack of skilled workers across the construction industry globally, is set to intensify in 2025. This is likely to push up the cost of labour – especially in high-growth sectors, such as renewable energy, digital infrastructure, and housing.
Alan Manuel, group chief executive officer, Currie & Brown, comments: “Year-on-year cost inflation has become a fact of life for the global construction industry. Clearly, this year will be no different with moderate rises on the horizon. But the real challenge is uncertainty, which will be exacerbated by continuing macro-economic and geopolitical volatility. So, resilience will be the key to survival and success in 2025 and beyond.”
The report proposes ways in which organisations can act to both better prepare for inevitable unknown headwinds and to exploit future opportunities:
- Be adaptable
The industry must adapt and flex, by adopting a more open-minded and collaborative approach. For example, creating more diverse supplier networks and contracts will spread risks and mitigate the impact of exposure to unforeseen economic turbulence.
- Address skills shortages
Taking specific action on several fronts will help alleviate the ongoing shortage in skilled labour. Carefully considering the availability of labour in the planning stages of a new project and investing in training from the outset will help ensure adequate provision for the duration of the project. And tapping into workers with transferable skills from different sectors, such as technology and healthcare, will broaden the pool of potential talent.
- Double-down on data
The industry should make use of more granular data to stress-test new projects and radically improve the accuracy of cost analysis. It will also enable project owners and their construction partners to rapidly pivot and protect critical cost, time, and environmental outcomes in the face of unexpected scenarios.
Doug McGillivray, managing director Southern Gulf, Currie & Brown, comments: “The region continues to provide significant opportunities for construction. However, clients should approach with caution. There are many uncertainties that could impact costs, delays and feasibility. Robust risk management strategies and flexibility in project planning will be needed to build resilience for the long term.”
About the research
The figures within the report have been extrapolated from regional sources that reflect escalation and growth cost at the time of publication in February 2025. No assurances are given that any future results or events will be consistent with any views, forecasts, advice, anticipations or expectations within the report.
Please see below for regional cost escalation statistics
Market | 2025 cost escalation |
United Kingdom | 3 – 4% |
Europe | 2 – 3% |
Hong Kong | 0 – 1% |
China | 3 – 4% |
Japan | -0.5% |
India | 5 – 7% |
Australia | 5 – 6% |
UAE | 2 – 5% |
KSA | 5 – 7% |
Mexico | 3 – 4% |
Columbia | 3% |
Peru | 2% |
USA | 4% |
About Currie & Brown
Currie & Brown is a world-leading provider of cost management, project management and advisory services, covering the full range of public and private sectors. Our purpose is to add value that makes building a better future possible. We help clients navigate volatility and unpredictability, providing the certainty that enables better, more sustainable built environments for all. Our services reflect the complexity of physical assets’ uses and integrated lifecycles, addressing every aspect, from concept, design and construction, to the assessment of best-value options for ongoing use, maintenance, operation and eventually deconstruction.
With principal offices in London, Dubai, Riyadh, Hong Kong, Mumbai, New York and Shanghai, we operate across 70 offices throughout the Americas, Asia Pacific, Europe, India and the Middle East.