The most expensive cities in the world for developers are Geneva, London and New York. Munich moved up to 5th place last year and is more than 25% more expensive than Berlin (ranked 27th). Frankfurt ranked 27th in the list. The five most affordable cities are once again in Asia.
The rankings come from the annual [[Arcadis Construction Cost Index (ICC)]], for which the international planning and consulting company analysed 100 major cities in the world in terms of their construction costs.
Germany experienced some of the highest construction inflation in Europe in 2022. Numerous projects, particularly in schools, commercial and residential construction, were put on hold. In residential construction in particular, orders decreased significantly year-on-year due to high prices and the tight capital market. Positive signals for the German construction sector came from major infrastructure projects in the areas of energy supply, rail and road construction. Major industrial construction projects such as the Gigafactories in Kaiserslautern and Magdeburg and data centres in Frankfurt are also supporting demand.
Munich continued its upward trend as the most expensive German city. After ranking 15th in 2021 and 8th in 2022, the Bavarian capital is now the fifth most expensive city in the index. While construction costs in Germany increased by 9.6% year-on-year in Q3 2022, price inflation for tenders in Munich was around 16% in 2022. However, this is expected to fall to around 3% in 2023. Costs in Munich are now more than 25% higher than in Berlin (ranked 27th in the index) - a huge price premium for building in the Bavarian capital.
The Arcadis International Construction Costs Index (ICC) is an industry-established annual barometer for the relative comparison of global construction costs. In 2023, the comparison covers 20 building types in 100 major cities on different continents. The index is based on a survey of construction costs, a review of market conditions and a professional assessment by a global team of experts. For each city, benchmark prices were determined for each building type and converted to U.S. dollars (USD). Then, also for each building type, the price range between the lowest and highest determined costs was indexed against the price range of the same building type in Amsterdam, with the respective Amsterdam mean equal to 100.