A forecast by consultant Currie & Brown says construction costs globally will rise 2.4% this year, but notes that figure masks wide variations by country and an underlying volatility caused by trade wars, climate events, conflict, labour shortages and supply chain disruptions.
“In 2026, construction will keep moving. But it will be harder to move with confidence,” writes Currie & Brown group chief executive Dr Alan Manuel in the report’s foreword.
“The people who shape the built environment are making decisions in harder conditions than we’ve seen for some time.”
By country, cost escalation projections range from 0%-to-1% in Hong Kong to 3.6% in UK to 12% in Japan.
But as Manuel notes: “The issue in 2026 will not be cost itself. It is the uncertainty beneath it, and the difficulty of knowing how, where and when challenges might hit.”
Here is a breakdown of projected cost escalation and economic growth in select construction markets around the world.
Saudi Arabia
Costs up: 4%; Economic growth: 4–4.6%
Currie & Brown expects construction activity in the kingdom to keep rising, even as some projects are scaled back, driven by ongoing public spending and investment under Vision 2030. Costs are rising due to heavy use of imported and specialist materials, and strong demand for Tier 1 and Tier 2 contractors. Skilled labour is also in short supply.
Underneath the headline cost projection of 4% are higher hikes in more complex projects relying on imported and specialist materials and a limited pool of experienced labour. Data centres and digital infrastructure are the fastest growing sectors with expected cost increases of 6-8%. Tourism, entertainment and high-end hospitality are also expanding. Costs are expected to rise here by 5-7%.
UAE
Costs up: 3%; Economic growth: 5%
The report says a lack of contractors available to bid is driving higher costs and longer procurement periods. Supply chain disruption, changes in material prices, oil price volatility, geopolitical tensions and rising freight costs may also delay projects and increase prices. Strong demand for data centre equipment and luxury building finishes is adding further pressure.
Growth will be strongest in transport, infrastructure, data centres and major tourism projects backed by government programmes.
India
Costs up: 4.5–5.5%; Economic growth: 5.5–6.5%
One of the world’s fastest-growing large economies, India will see growing construction activity driven by domestic demand and public investment in infrastructure, transport, and cities. Growth corridors are adding office, industrial and logistics work, while manufacturing drives demand for new and refurbished hotels in tier-2 and tier-3 cities.
Inflating costs are skilled labour shortages and wage growth, swings in steel and cement prices, and imported MEP components exposed to global supply chain complexity. High demand across infrastructure and real estate will also put pressure on contractor capacity. Cost pressure will be highest in manufacturing, technology (including data centres) and premium office space.
USA
Costs up: 4%; Economic growth: 1.7%
Data centres and energy lead the construction pipeline.
Cost hikes are driven by tariff uncertainty, labour shortages and material price increases. Projects that import materials or need specialist trades will face the most pressure, especially electrical and HVAC. To secure enough people, projects often rely on incentives and relocation support, which lifts costs and adds delivery risk.
“Projects with strong contractor outreach, flexibility in material choices, clear visibility of labour and equipment availability, proactive lead time mitigation strategies, and early procurement will be better placed to manage price swings and protect schedules,” the report says.
Ireland
Costs up: 2–3%; Economic growth: 3.1%
The sector here is expected to grow by 4.8% a year from 2026 to 2029, helped by National Development Plan spending and private investment. Housing is a priority, with around 40,000 new homes expected in 2026.
Labour is the main cost driver. The report says Sectoral Employment Orders will keep lifting labour costs, while specialised and technical skills, especially MEP, are in short supply.
UK
Costs up: 3.6%; Economic growth: 1.5%
“UK construction activity is expected to increase in 2026, but it won’t happen overnight,” the report says.
Government investment plans in healthcare, transport, energy, data centres, housing and regional regeneration have long lead times because of planning, complex procurement, and the need to secure private finance.
The report predicts growing momentum in the private commercial sector as developers respond to strong demand for quality space. A pipeline of new stadium projects could spur regeneration in towns and cities.
The report says progress is likely to be “cautious” in 2026, with programmes taking time to move from intent to site, but the expectation is that workload will build over the next 12-18 months.
The main cost drivers are labour, energy prices, and the impact of regulatory change. Growth is expected to be strongest in data centres, healthcare, and sports and leisure.
Nick Gray, Currie & Brown’s chief operating officer for UK and Europe, said: “Cost increases in the UK remain moderate, but uncertainty is holding the market back.
“Many projects are only just viable, so development is moving carefully, often step by step.
“The Autumn Budget did little to shift that trajectory. It fell short for construction, offering no new tax incentives, increasing pressure through wage and tax changes, and providing scant detail on housing or digital infrastructure investment.”
Spain
Costs up: 1.6%; Economic growth: 2.2%
Domestic demand, private investment, rising incomes and easing inflation paint a generally positive picture for construction in Spain.
Growth is expected to be strongest in high-tech, hospitality and residential, where demand still outstrips supply.
Energy costs and a stronger euro are the main cost drivers, while labour remains a constraint across all sectors. Like everywhere else, Spain is vulnerable to trade tensions and disruption to global logistics.
Australia
Costs up: 5–8%; Economic growth: 2.1%
Construction activity is likely to stay broadly flat in 2026, but costs will keep rising, the report says.
This will be to a lesser degree in Sydney and Melbourne as infrastructure spend eases but strong demand in education, health and early Olympics work will add cost pressure in Brisbane.
Labour scarcity, interest rates and supply chain uncertainty adds to that pressure.
The report expects cautious investment owing to rising costs, falling commodity prices and tariff uncertainty.
Hong Kong
Costs up: 0–1%; Economic growth: 2.9%
“The market may start the year soft, but major public works and a gradual pick-up in private housing should support growth,” the report says of Hong Kong.
It doesn’t expect contractors to price as aggressively this year as they did in 2025.
Labour and material costs should remain stable thanks to strong links with Mainland China.
Growth will be led by infrastructure, healthcare, and residential work, backed by government investment and improving housing market conditions.
Japan
Costs up: 10–12%; Economic growth: 1.1%
The report expects sharp cost increases of 10–12% for base build materials and hikes in MEP of 14–16%. Labour scarcity and imported energy are the major drivers.
It predicts that refurbishment of older buildings will be attractive where land and new-build costs are too high.
Demand remains in semiconductors, data centres and hospitality, bolstered by increasing tourism.
The report is available here.
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