Large Ware House (Distribution Centre) - Construction Cost Price Trend and Forecast

Regional Price Overview

Get the latest insights on price movement and trend analysis of Large Ware House (Distribution Centre) - Construction Cost in different regions across the world (Asia, Europe, North America, Latin America, and the Middle East & Africa).

Large Ware House (Distribution Centre) - Construction Cost Price Trend for Q2, Q3 and Q4 of 2022

The construction costs for large warehouses ( distribution centres) have rocketed during the said period owing to the rising material pricing levels and complex logistics. Construction teams worldwide face tremendous cost pressure due to rising steel and lumber prices. In India, the construction costs for warehouses have increased by approximately 10% since the pandemic, with Mumbai and Kolkata witnessing the highest cost increase.

In the Asia-Pacific region, the prices are up by 10-12% compared to the previous levels. Europe witnessed a 10-25% increase, while America witnessed a 10-16% increase in material pricing. Other factors looming over the construction sector are labour shortages and rising interest levels worldwide. Governments worldwide are looking for ways to streamline the raw and intermediate products moving upstream and downstream with fewer trade barriers. Hence, the price trends for the construction of large warehouses surged throughout the period.

Analyst Review

According to Procurement Resource, the construction costs will continue the rise given the current economic scenario. The labour shortages have risen since the pandemic and are not expected to resolve anytime soon. The ongoing market volatility and intermediate prices will further add to the high costs. However, the rise will vary widely depending on the regions and certain local factors.

For the First Quarter of 2022

Asia

Inflation, high material costs, and a scarcity of skilled labour in Singapore kept construction commodity prices at all-time highs in 2022. Real building output is likely to surpass pre-pandemic levels by the end of the year. Metal, lumber, and other building materials prices soared in 2021, affecting key international cities in Asia Pacific, and are expected to remain at record highs for the rest of 2022.

North America

The average price of construction materials in the United States grew by 1% between Q3 2021 and Q4 2021. Many individual material costs remained much higher than the prior year at the same time. When compared to January 2021, copper wire costs had more than doubled. Copper prices have risen dramatically as a result of increased demand and supply constraints, as well as the continued recovery of the US economy.

Although PVC is a viable copper alternative, its price has risen in lockstep with copper pipe pricing. Changes in material prices have an impact on the final cost of rebuilding a property. In the second half of 2021, lumber prices remained stable, resulting in less variation in rebuilding costs across states (ranging from -1.6 percent to 0.76 percent, depending on the state) and a decrease in the national average cost (-0.35%) from Q4 2021 to Q1 2022.

For the Fourth Quarter of 2021

Asia

In the fourth quarter of 2021, India had a significant increase in construction material prices, such as steel, iron, and cement, which raised construction costs. As a result of the increase in gasoline prices, the prices of important commodities such as aluminium climbed rapidly. The cost of labour had also risen, causing the cost of housing to rise as well.

Following a 30-40% increase in cement prices from 300 INR/bag to 450 INR/bag in Andhra Pradesh, construction costs jumped by 30-40%. Along with price increases for plumbing, tiles, and electricity, steel prices increased from 47,000 INR/MT to around 69,000 to 72,000 INR/MT.

Europe

Due to the rising pricing of commodities such as lumber, steel, glass, and concrete, as well as supply chain issues and labour shortages, building output in the United Kingdom declined by 1.8 % in October 2021. However, with new housing projects on the way, demand remained strong.

North America

The price of raw materials fell in December, but construction costs in the United States continued to rise. Steel mill goods grew by 0.2 % in the fourth quarter, followed by a 20 % increase in building prices in 2021.

The increase in prices was due to a growth in the number of upcoming building projects in the region, as well as an increase in raw material prices. In December, for example, prices for plastic manufacture items grew by 1.3 %, while plywood and timber prices increased by 17.6 % and 12.7 %, respectively, despite rising inflation for home materials in the region.

Latin America

In Latin American countries such as Brazil, inflation continued to rise construction prices as well as raw material, labour, and fuel prices, despite the country's poor economic growth due to political issues, supply shortages, a slow post-pandemic recovery, and the falling value of the Real against the US dollar.

For the First, Second and Third Quarters of 2021

Asia

Despite the pandemic and other economic issues, construction in Asia increased dramatically, with an increase in infrastructure investments and a surge in demand for residential construction. In the third quarter of 2021, expenses in India climbed by 3.8 % due to supply limitations in timber and other metal construction materials in the region. The Construction Activity Index (CAI) surged sharply in Australia, New Zealand, and the Philippines, but fell sharply in Sri Lanka, Malaysia, and Singapore.

Europe

Following a surge in raw material prices, construction expenses in Europe exploded in July after climbing for seven months in a row in 2021. Timber prices in Belgium have climbed by 29%. The demand for building services was high because most people began working from home amid the pandemic's lockdowns.

Prices in the region rose as a result of supply constraints and inflation. Another factor contributing to the price increase was a labour scarcity. In 2021, the cost of circuit board materials such as copper, resistors, semiconductors, connections, and capacitors grew by 10%. Construction expenses in Europe have also risen because to increases in maritime freight, lumber, and cement prices.

North America

Following a double-digit %age increase in raw material prices in 2021, construction expenses in the United States continued to grow substantially well into August. Plywood and lumber prices are expected to rise 15.9% in 2021. The price of brass and copper grew by 45.3 %, while the price of aluminium increased by 35.1 %.

The prices of plastic and gypsum goods grew by 29.6% and 22.9 %, respectively, while the prices of insulating materials increased by 17.2%. Asphalt, siding goods, and tar roofing all saw a 15.8% increase in price.

In addition to material expenses, transportation and fuel costs have risen. The cost of freight transportation had increased by 14.1 %. Construction prices in the United States have risen due to inflation and supply chain concerns such as shipment delays.

Latin America

Peru's construction market grew by about 17 % in 2021, making it one of the fastest growing markets in Latin America. Other countries in the region, such as Brazil, Argentina, and Mexico, grew their building industries by 1.6 % to 5.4 %, according to reports.

For the Year 2020

Asia

The building industry continued to deteriorate in the second quarter of 2020. The Construction Activity Index in Asia-Pacific fell by 26 points, matching the global decline of 24 points. The building index in Malaysia had plummeted 65 points, while it had dropped 8 points in China.

The industry's demand in Asia-Pacific shrank as a result of the epidemic and the ensuing lockdown restrictions. In comparison to China, where demand decreased and then rebounded after the second quarter, there was a dramatic drop in demand in India and the Philippines.

The industry's conditions in India improved slightly in the third and fourth quarters. Construction prices in India surged dramatically in the second quarter due to labour shortages, but progressively eased in the later quarters of 2020.

The average cost of a fit-out in Delhi was 64 USD/ft², whereas in Ahmedabad it was 57 USD/ft². Tokyo saw a construction boom due to a labour shortage, with office space construction costs as high as 179 USD/ft², despite the region's average cost of 93 USD/ft².

Europe

Construction outputs in Europe fell by 30% in the second quarter of 2020 compared to the first quarter. Due to the epidemic, several building sites in France were shut down, and the country saw the biggest decline in production levels in the region. However, in the Netherlands and Germany, there was little to no impact in the construction business, as most sites continued to function despite the pandemic. As the lockdowns were removed and the industry recovered in the second half of the year, some locations reopened.

In October, output volumes in France were just 5% lower than they were in January 2020. In the first three quarters of 2020, the number of residential permits in Turkey, Austria, and the Netherlands declined.

The issue of non-residential licences decreased the most in Belgium, Spain, and France. The production of building materials in Spain and France likewise saw a considerable drop in volume in the first half of 2020, but it returned later in November 2020 to pre-pandemic levels.

North America

Despite the covid-19 epidemic, average building expenses in the United States increased by 2.03 % in 2020. The costs differed depending on the state and the construction industry. For example, the cost of constructing a warehouse space in Las Vegas was 70 USD/ft², whereas the cost of constructing a general hospital in Los Angeles was 930 USD/ft².

The sector developed throughout the epidemic because some critical projects in the country were allowed to continue, causing costs to rise due to rising labour and raw material costs. Even though raw material prices had risen, construction costs declined by 2.2 % in June 2020 for the first time in ten years. The drop was caused by a decrease in demand for construction services.

Latin America

Government-imposed lockdown limitations in Latin America lasted longer than in other parts of the world, having a significant impact on the region's economic operations. In Mexico, the economy grew slowly and there were little foreign investments. The value of the peso fell against the US dollar, lowering the cost of imported raw materials and equipment.

Public demonstrations and anti-government movements in Chile resulted in a social crisis, which reduced private investment. As a result, prices in the construction industry fell by 18% as the market in the region contracted. After the region's lockdowns were lifted by the end of 2020, construction prices in Argentina surged dramatically as a result of inflation caused by inadequate government policies. In 2020, the value of the Brazilian Real versus the US dollar fell by 30%, resulting in a 4.6 % increase in building rates.

Procurement Resource provides latest prices of Large Warehouse (Distribution Centre) Construction. Each price database is tied to a user-friendly graphing tool dating back to 2014, which provides a range of functionalities: configuration of price series over user defined time period; comparison of product movements across countries; customisation of price currencies and unit; extraction of price data as excel files to be used offline.