The prices of construction materials have increased due to inflation, which has reflected in the final costs of construction in various countries, including Portugal. We’re talking about increases in the prices of steel, cement, wood, insulation, among others. This increase has been so significant that Lisbon and Porto are among the 75 most expensive cities in the world for building construction, according to the International Construction Costs (ICC) 2023 report.
When analyzing the top 100 cities worldwide across six continents, we descend to the 68th position to find the Portuguese capital in this ranking, followed by Porto, ranked as the 74th most expensive city in the world for building construction. These findings were revealed by the same Arcadis report, which evaluates cities based on construction costs and the complexity of developed projects, considering 10 different types of buildings (residential, commercial, and public sector).
In the top 3 are Geneva, Switzerland, followed by London, United Kingdom, and New York City, United States.
The ICC 2023 analysis also considered the energy efficiency requirements of buildings, including carbon-neutral design, as these factors have a significant impact on construction prices.
Although real estate markets are cyclical, the current challenges related to carbon neutrality and climate resilience will not disappear, as the decarbonization of the real estate sector continues to expand.
The process of obtaining permits and authorizations for construction projects can be time-consuming and bureaucratic in Portugal, which can result in delays and additional costs for developments, reflecting in the final prices.
It is important to highlight that increases in construction prices can vary depending on the geographical location and the type of project.
These price increases have an impact on both real estate buyers and investors, as well as construction professionals, but not taking action is not an option. Despite all the mentioned factors, coupled with continuously rising interest rates, construction professionals are not sitting idly and are doing their best to respond to the housing supply shortage.