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Based on a global survey of 91 cities, Zurich has surpassed Geneva to claim third place in the worldwide ranking, and the most expensive place to build in Europe, with an average cost of US$5,035 per m2, up 8.2% on the year.

Fourth in the world and second in Europe, Geneva averages €4,676 per m2 with Munich (€3,535 per m2), Dublin (€3,515 per m2) and Vienna (€3,515 per m2) following, and all ranked in the top 25 globally.

With the Olympics approaching, leisure investment is reported to be on the up, especially in Paris (€2,979 per m2), where increased demand has caused the French capital’s cost escalation to increase by 0.1 percentage points to a forecast of 2.5%.

Furthermore, data centres and advanced manufacturing are said to have seen booming demand across Europe with the EU’s Net Zero Industry Act looking to promote investment.

Demand is driving up prices with an advanced manufacturing facility in Amsterdam now costing €3,575 per m2.

In Munich, greater demand for high-grade office space, as employers work to attract the best talent, is contributing to growing costs in the city – a burgeoning centre for tech companies – with prime A-Grade office space being pushed up to €5,222 per m2. High labour costs at an average of €77.85 per hour are also driving up overall prices in the market.

Across the 15 European cities surveyed, labour costs average €63.88 per hour – boosted by the highs of Geneva (€116.59) and Zurich (€116.31) who lead the continent.

In the face of potential labour bottlenecks across Europe, Turner & Townsend is advising clients to prioritise identifying the right procurement strategies and to work collaboratively with the supply chain to mitigate the risk to delivery.

Euan Reaper, director of cost management in Europe at Turner & Townsend, said, “Following several years of economic turbulence, and the sharp impact of the war in Ukraine, it is very encouraging to see so much opportunity across European construction. We’ve seen increasing activity across various industries including investment from businesses looking to capitalise on the leisure sector around the Olympics and UEFA EURO 2024, and growing demand for advanced manufacturing as part of the wider global nearshoring trend.

“However, we need to be wary of the increasing price of labour across the continent, which, without a concerted effort to increase the skilled workforce, could raise prices and create labour bottlenecks. It’s also important to watch the impact of rising sustainability requirements for real estate portfolios, and how this will change investment patterns and asset values. If businesses want to leverage Europe’s renewed confidence, evaluating contract models and carbon costs will prove to be crucial to mitigate risk.”

Globally, the ICMS report’s survey of 91 global cities shows the US continuing to dominate the rankings of the most expensive places to build, with six US cities in the top ten.

New York has retained its position as the most expensive market to build in for the second year running at an average cost of US$5,723 per m2.