Infrastructure Construction Costs in Asia - Asian Infrastructure Finance 2019

2019 Asian Infrastructure Finance Report

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Infrastructure Financing Costs & Activity in Asia

Bangladesh China India Indonesia Pakistan Philippines Russia Türkiye

Infrastructure Construction Costs in Asia

Bangladesh China India Indonesia Pakistan Philippines Russia Türkiye

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Overview 2023 Asian Infrastructure Finance Report 2022 Asian Infrastructure Finance Report 2021 Asian Infrastructure Finance Report 2020 Asian Infrastructure Finance Report 2019 Asian Infrastructure Finance Report

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Our pilot benchmark roadBLOC is designed to track project costs both between countries and over time, independent of exchange rate movements (and inflation rates). This results in a more stable index that reflects local productivity and performance in-country over time, and it is reasonably easy to calculate regularly.

The report benchmarks construction costs across eight countries — Bangladesh, China, India, Indonesia, Pakistan, Philippines, Russia and Türkiye.

A fuller elaboration of the methodology and discussion can be found in the report.

Bangladesh

China

India

Indonesia

Pakistan

Philippines

Russia

Türkiye

Bangladesh

Infrastructure construction activity looks set to rise in Bangladesh given forecasted growth in gross fixed investment and increased government spending on infrastructure. However, structural challenges remain, in the form of high construction costs, delays and efficiency issues. Bangladesh is dependent on imports for key construction materials—given the projected depreciation of the taka and flat prices of industrial raw materials, construction costs in Bangladesh are likely to rise in 2019.

Construction costs outlook

Rising, due to inflationary pressures, the projected depreciation of the taka, as well as Bangladesh’s strong dependence on imports for construction inputs.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

24,000/m
2018 estimated cost, local currency unit

BDT530,000/m
2018 USD estimated cost, market exchange rates

USD6,350/m
Costs in Dhaka compared to base (Sydney)

Significantly higher local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Activity likely to increase

China

Infrastructure construction activity looks likely to increase in China as the government could fast‐track projects in response to change in its economy.

Construction costs outlook

Rising, due to a skilled labor shortage and a greater focus on sustainability and safety.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

18,600/m
2018 estimated cost, local currency unit

CNY26,000/m
2018 USD estimated cost, market exchange rates

USD3,900/m
Costs in Shanghai compared to base (Sydney)

Higher local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Activity likely to increase

India

Infrastructure construction activity looks likely to increase in India, although implementation issues could slow the realization of announced projects. Although construction materials tend to be sourced locally, the projected depreciation of the rupee may drive prices up due to the increased cost of imported raw materials such as steel and oil.

Construction costs outlook

Rising, due largely to increasing material costs. The depreciation in the rupee is also likely to drive costs up because of the need for imported raw materials for construction, as well as imported machinery.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

7,900/m
2018 estimated cost, local currency unit

INR104,000/m
2018 USD estimated cost, market exchange rates

USD1,450/m
Costs in Bangalore compared to base (Sydney)

Lower local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Activity likely to increase

Indonesia

In Indonesia, infrastructure construction activity is expected to increase, although some projects may be delayed given the government’s desire to protect the currency. However, there is a long‐term development goal to improve infrastructure, which is likely to be maintained. As such, continued demand for inputs from large‐scale projects, along with a weakening rupiah and flat industrial raw materials prices, mean that construction costs look likely to rise.

Construction costs outlook

Rising, due to projected currency depreciation and strong demand for construction materials.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

10,650/m
2018 estimated cost, local currency unit

IDR31,800,000/m
2018 USD estimated cost, market exchange rates

USD2,150/m
Costs in Jakarta compared to base (Sydney)

Lower local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Activity likely to increase

Pakistan

In Pakistan, the infrastructure construction activity outlook is neutral, but with high uncertainty as the country seeks to secure financial assistance.

Construction costs outlook

Rising, due to currency depreciation.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

15,600/m
2018 estimated cost, local currency unit

PKR365,000/m
2018 USD estimated cost, market exchange rates

USD2,950/m
Costs in Islamabad compared to base (Sydney)

Higher local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Neutral

Philippines

Infrastructure construction activity in the Philippines look likely to increase, driven by the government’s state utilities in the Philippines. Authorities tend to underspend as compared to projected pipeline, given institutional constraints. Demand from “Build, Build, Build” and inflationary pressure from the projected depreciation of the peso are likely to drive construction costs up.

Construction costs outlook

Rising, due to projected currency depreciation and strong demand for construction materials.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

5,110/m
2018 estimated cost, local currency unit

PHP60,000/m
2018 USD estimated cost, market exchange rates

USD1,150/m
Costs in Manila compared to base (Sydney)

Lower local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Activity likely to increase

Russia

The outlook for infrastructure construction activity in Russia is neutral. Although the government has recently announced a strong push for infrastructure spending, uncertainty over the economic outlook means that fixed investment rates look likely to remain low, constraining infrastructure spending. As such, the outlook has been kept at neutral, pending greater commitment via more detailed infrastructure expenditure plans. The cost of construction is likely to increase, partly due to the potential depreciation of the rouble and flat prices of industrial raw materials leading to growing import costs for construction materials. However, the price increase for road construction inputs may be more muted as some materials are sourced locally.

Construction costs outlook

Rising, due to projected currency depreciation.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

17,500/m
2018 estimated cost, local currency unit

RUB230,000/m
2018 USD estimated cost, market exchange rates

USD3,450/m
Costs in Moscow compared to base (Sydney)

Higher local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Neutral

TÜRKIYE

Infrastructure construction activity in Türkiye looks likely to decrease, as there is significant downside risk for the overall construction sector and the government has suspended investment projects for which the tender process has not been finalized. The projected depreciation of the lira, coupled with Türkiye’s heavy reliance on imports for construction materials and the projected flat prices of industrial raw materials is likely to lead to construction costs increasing.

Construction costs outlook

Rising, due to projected currency depreciation and ensuing inflationary pressure.

Four-lane urban arterial road including traffic-controlled intersections
PPP equivalent (roadBLOC/m)

8,350/m
2018 estimated cost, local currency unit

TRY10,000/m
2018 USD estimated cost, market exchange rates

USD1,700/m
Costs in Istanbul compared to base (Sydney)

Lower local construction cost, taking into account purchasing power parity
Outlook for infrastructure construction

Activity likely to decrease

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The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank whose mission is Financing Infrastructure for Tomorrow in Asia and beyond—infrastructure with sustainability at its core. We began operations in Beijing in 2016 and have since grown to 110 approved members worldwide. We are capitalized at USD100 billion and AAA-rated by the major international credit rating agencies. Collaborating with partners, AIIB meets clients’ needs by unlocking new capital and investing in infrastructure that is green, technology-enabled and promotes regional connectivity.

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