Global construction costs are set to rise by up to 7% in 2025, thanks to labour shortages, economic uncertainty and the digital technology revolution, cost management firm Currie & Brown has predicted.
Another factor is possible trade tariffs, led by controversial US President Donald Trump, who is helping to create a more protectionist and politically volatile environment – factors that could drive up the cost of materials and labour.
Labour shortages are particularly acute in high-growth sectors, such as renewable energy, digital technology infrastructure, and housing.
The growth of AI could generate competition for specialist materials, also adding to global construction costs.
Alan Manuel, group chief executive officer, Currie & Brown, said: “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.”
To prepare for headwinds this year, Currie & Brown urged organisations to create more diverse supplier networks and contracts to spread risks and mitigate the impact of exposure to economic turbulence.
They can address skills shortages by investing in training and tapping into workers with transferable skills from different sectors, such as technology and healthcare.
Nick Gray, chief operating officer, UK and Europe, Currie & Brown, said: “Economic uncertainty, the digital revolution and acute skilled labour shortages are driving up construction costs in the UK and globally. In the UK alone, it is estimated that over 250,000 extra workers will be needed to meet UK construction output by 2028.
“To meet this challenge and others head-on, the industry must remain agile and seek opportunities to innovate. This will be key to driving sector growth and delivering more sustainable built environments for all.”
