FEATURES Table 5-3 Hourly Cost of Labor (Unskilled-Skilled) (Including Overheads) Year-Over-Year Percent Change
2013 Hourly Wages in Local Currency
Australia Canada China
Germany India
Ireland Japan
Malaysia Russia
Singapore
South Africa South Korea
United Arab Emirates United Kingdom United States Vietnam
Source: Turner & Townsend
Recently, signs have appeared that European officials are in the midst of a policy re-examination, as they consider new ways to boost growth, including reducing austerity, increasing monetary aid and unfreezing bank lending. This will likely trickle down to other sectors of the economy and serve to improve consumer confidence and spending.
Eastern Europe Construction costs are generally lower in Eastern
Europe than Western Europe, but are rising due to high wage increases and general inflation resulting from its region’s growing economies. Retail construction costs increased by up to 4% in 2012. However, costs are rising off a low base in the region. Eastern Europe is the fastest-growing region in Europe
with countries such as Estonia in the Baltic region, Turkey and Russia posting reasonably strong growth in 2013. Istanbul was the most active retail market in the
region in 2012 with several new shopping centers built, followed closely by Moscow and St. Petersburg. Strong GDP growth per capita is forecast for the region, particularly for robust retail markets in Poland, Russia, Turkey, Ukraine and the Czech Republic.
Middle East Construction costs in the Middle East have increased
between 2% and 3% since mid-2012 and are expected to increase more rapidly in the future due to a robust construction market. These expected costs are on the high end of the global range, despite the availability of relatively inexpensive labor. (The United Arab Emirates, for instance, have construction costs per sq m currently estimated at Dhs6,000-7,500 for large shopping centers, despite labor costs of only Dhs15-31.) The higher construction expenses can be explained partly by increased difficulty in building in the region due to inclement weather. But increases also occur due to complicated designs and a high standard of fit-out that is becoming the norm for new construction in the region. The Middle East has put the GFC and the resultant oil-
price crash well behind it and is pursuing solid, diversified growth. It is keen to reduce its dependence on oil revenues and promote manufacturing, tourism, services and airlines. Over US$700 billion of tenders are expected across the Gulf Countries during 2013 for all forms of construction, including high-speed rail, refineries, shopping centers and football stadiums. Abu Dhabi has replaced Dubai as the growth center for new retail, with nine schemes underway. Qatar, already with an extensive
A$ C$
CNY EUR INR EUR Y
MYR RUB S$
ZAR KRW DHS GBP US$ VND
40-70 46-62 13-23 33-45 23-63 22-29
2,100-2,700 10-21
480-530 15-26 18-52
12,000-18,000 15-31 17-31 54-76
130,000-230,000
(calculated from midpoints of hourly wage ranges)
2011 4.0% 0.0 8.0 2.5 7.0 0.0 2.0 2.0 5.0 2.5 6.0 4.0 0.0 0.0 2.0 8.0
2012 4.0% 1.0
10.0 2.5 8.0 0.0 2.0 3.0 6.0 2.5 7.0 4.0 2.0 0.5 2.0 9.0
2013 3.5% 1.4 3.5 3.0
13.0 0.5 2.0 3.0 6.0 3.0 6.0 6.0 3.0 1.0 2.0 8.0
INTERNATIONAL COUNCIL OF SHOPPING CENTERS
23 4
RETAIL PROPERTY INSIGHTS VOL. 20, NO. 2, 2013
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