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Overseas, Inflation Creeps Back

12/22/2010

By Tom Nicholson

Text size: A A
The global recession knocked down building costs in many Asian countries in 2009, but inflation appears to be making
a modest comeback in the region this year. The London-based international cost consultant Gardiner & Theobald Inc.
reports that building costs in Shanghai declined 3.4% in 2009 after increasing about 7% in both 2007 and 2008. This
year, building costs in Shanghai increased 1.4%, says G&T.

In Hong Kong, G&T saw building costs fall 3.7% in 2009

after posting double-digit gains during each of the
previous two years. In 2010, building costs in Hong Kong
were back up 4.8%, says G&T. The firm reports a similar
trend in Japan.
In India, building cost escalation is slowly coming under
control. It has been declining from an annual rate of 19%
in 2007 to 12% for this year, according to G&T’s report.
Vietnam is experiencing its own building boom, and
Turner Construction Co., New York City, is there working
on several projects, ranging in size from 74,500 sq meters
to 930,000 sq m. This activity is starting to drive costs up
in Vietnam, says Ken Osterland, Turner’s project manager
+ Image in Hanoi.
Osterland says the overall market has been impacted by
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12% inflation of the dong, which in turn has had an impact
Forecast: A Weak Recovery Checks Inflation
on material prices. In Ho Chi Minh City and Hanoi,
Confidence Index: Heads of Major Firms Believe Osterland says, contractors face price hikes of 23% for
Market Is Nearing Stability
structural steel since last January, which has pushed
Equipment: Why Few Are Debating the New prices in Vietnam to $792 per tonne.
Federal Fuel Economy Rules
Lumber: Chinese Demand Props Up Prices During the same period, Turner saw prices for concrete
reinforcing bar go up 19% for medium-sized bar and 13%
International: Recession Relinquishes Grip On
Global Construction Costs for larger bar, while prices for cement increased 3%. Local
contractors on Turner’s projects “are starting to ask for 5%
Complete Report price-escalation clauses in their contracts as a result of
inflation,” says Osterland.
----- Advertising ----- China’s relentless growth is starting to push prices back
up after 2009’s set-back. Prices for concrete reinforcing
bar in Shanghai increased from 3,682 Renminbi per tonne
in December 2009 to 4,346 RMB per tonne this
December, according to the international cost consultant
Rider, Levett and Bucknall, which is headquartered in
Phoenix. RLB notes that, during the same period, cement
prices in Shanghai went to 398 RMB from 367 RMB per
tonne.
For rebar in China, “the trends are going up despite a
downward adjustment in rebar prices in the middle of this
year,” says H.K. Yu, analyst in RLB’s Hong Kong office.
“Although the Chinese government has recently
implemented stringent measures to curb the rising
property market, construction activities in China appear
not to have been affected, and there is still a strong
demand on construction materials,” he says.
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On average, cement prices in China this year have risen

by about 500 RMB per tonne, says Liu Zuoyi, spokesman for the China Cement Association in Beijing. He cites
“increases in demand and production costs, along with electricity-use restrictions imposed by the government this ENR's Top Lists
quarter on energy-intensive industries,” as the reasons behind the recent price increases for cement.
ENR attempts to bring structure to an otherwise huge
and chaotic industry by performing annual survey and
The same dynamics are also pushing up steel prices in China. Iron-ore prices went from $60 per ton in December 2009 ranking companies engaged in general contracting,
to $170 per ton currently, says Gan Yong, spokesman for the China Iron & Steel Association in Beijing. “Robust global specialty contracting, engineering, architecture,

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