London Still World's Second Priciest City For Construction, Report Finds

London remains the second most expensive city in the world in which to build, ranking behind only Geneva, according to a new report by consultancy Arcadis covering 100 global population centres in 2026.

Zurich took third place on the list, with Munich and Copenhagen rounding out an all-European top five. The UK and Ireland together accounted for half of the fourteen most expensive construction markets on the planet this year.

Dublin placed eighth on the ranking, followed by Bristol in ninth. Manchester came in 11th, trailed closely by Birmingham, Edinburgh and Cardiff, while New York, San Francisco and Philadelphia represented the United States among the priciest cities.

Hong Kong ranked as the most expensive city in Asia, placing 16th globally. Christchurch led Oceania at 47th, while Lagos topped the African rankings at 83rd, according to the report.

Despite London's position near the top of the cost table, Arcadis noted that construction inflation in the UK capital stayed under 2 percent over the past year, a slowdown the firm attributed to weak demand, particularly for housing projects.

The report cautioned that this softer pace is unlikely to continue beyond 2026. It pointed to the Gulf conflict as a factor delaying a recovery that had been widely forecast, even as underlying demand for construction work remains strong.

Arcadis pointed to rising global requirements for high-quality commercial and industrial space, alongside an urgent need to adapt existing buildings for energy efficiency and climate resilience. The firm also flagged a large investment backlog affecting schools, hospitals and other social infrastructure worldwide.

At the same time, the report warned that ongoing uncertainty tied to the Gulf conflict could still delay development activity, even if a resolution to the conflict appears close, as clients carry out further market testing and due diligence before committing to projects.

Arcadis described UK construction as remaining in what it called the slow lane, noting that construction forecasts for 2026 had been revised downward compared with earlier expectations for the sector.

The annual Arcadis International Construction Costs report is closely watched by developers, investors and contractors for signals on where building costs are rising fastest and which markets may offer relative value for new projects.