Construction activity is beginning to stabilize in many parts of the world, and costs are not rising as rapidly as in recent years. Most countries expect increases to be between 2% and 6% by 2026. This shows a more balanced market, but does not mean that construction is getting easier.
Uncertainty remains high and accelerating. Labor shortages, supply chain issues and political instability continue to affect projects. Many organizations are delaying or rethinking plans. The work is there, but the risks hold back progress.
Construction is still progressing, but the success of the project depends on early planning and good risk management. In 2026, the global focus will be on simpler procurement, faster decisions and delivery models that can adapt to changing conditions.
United Kingdom and Europe
Construction in the UK and Europe is progressing slowly. High labor costs, financial costs and approval delays make it more difficult to start and finish projects. Cost increases in 2026 are expected to reach 3.6% in the UK, 3% in France, 2-3% in Germany and Italy and 1.6% in Spain. These numbers suggest steady inflation, but they don’t tell the whole story.
Labor shortages are a key driver of regional increases. Rising material prices, particularly imported mechanical, electrical and plumbing components, and volatile energy prices are also adding pressure. Interest rates are making it difficult to secure funding, while strict rules and lengthy planning processes are holding back delivery. Even with more stable prices, it is still difficult to get projects off the ground.
Asia and Australia
Currie & Brown reports mixed conditions across Asia. In India, investments in infrastructure and technology keep activity strong. Cost increases between 3.5% and 5% are expected.
Singapore continues to experience pressure from labor shortages and increases in material costs due to geopolitical tensions, with expected cost escalation of 5-7%. Thailand can expect cost increases of 3-5%, also driven by higher labor and material costs, especially for the fast-growing high-tech sector. Malaysia will see costs increase by around 3%, reflecting stable demand and strong local supply chains. Government infrastructure investment and international semiconductor manufacturing continue to drive construction growth.
Hong Kong’s construction costs will stabilize or increase slightly in 2026, with public works and the recovery of the housing sector driving a 1% climb. In China, costs are likely to remain stable, with a slowdown in property investment reducing demand and leading to more competitive prices and limited inflation. Taiwan’s cost escalation ranges from 4% to 6%, while Japan faces significant pressures: 10% to 12% for basic materials and up to 16% for MEPs. Across the region, access to skilled labor and the impact of cross-border supply chains are key risks to consider.
Australia’s costs are expected to escalate by 5-8%. Labor shortages and pressure on interest rates are keeping costs high, while tariff uncertainty adds more risk. The strongest rises are expected in high-demand sectors such as data centers and infrastructure, particularly in Queensland, where shortages of skilled workers are most acute.
Middle East
“In 2026, the focus will be on simpler procurement, faster decisions and delivery models that can adapt to changing conditions.”
—Rachel Personius, director, Currie & Brown
After years of rapid expansion, the region is entering a more measured phase. Saudi Arabia’s large-scale projects are still underway, but many are being delayed or rescheduled. In the UAE, ambitious infrastructure, high-tech, hospitality and residential developments linked to population growth will sustain healthy construction activity.
Saudi Arabia and the United Arab Emirates expect cost escalation of 4% and 3%, respectively. Labor and capacity constraints remain key issues, with skilled trades hard to find. Costs are also affected by long supply chains and inflation in imported materials, although investment to strengthen local supply is improving. Some contractors add additional risk costs to their prices. With a slower pace, especially in Saudi Arabia, there is more time to plan, but also more pressure to get things right. Although the regional pipeline remains important, the outlook is more stable than expansive. Delivery will depend less on pace and more on precision, with more attention to sequencing, scope control, risk allocation and early decision making.
Latin America
“Many organizations are delaying or rethinking plans. The work is there, but the risks are holding back progress.”
—Rachel Personius, director, Currie & Brown
Construction in Latin America will grow in 2026, especially in Mexico, where nearshoring, logistics, data centers, rail and energy investment are the main drivers, and in Peru, where mining, infrastructure and renewable energy will lead growth.
Delivery is still tough. Labor shortages and long delays in imported materials will continue to be a problem. Mexico’s cost escalation is expected to be between 4.5% and 6%, with the highest pressure on rail, data centers and energy. In Peru, an escalation of 4.5% to 5.5% is expected, especially in mining, transport and energy.
conclusion
2025 has not been a year of crisis, but it has not been simple either. Disruption is structural and uncertainty is something to be worked with, not expected. In the regions, the signals are clear: delivery risk is rising, volatility is embedded and complexity is the new normal.
The key is mindset. Success will come from early planning and clear decisions. This means spotting risks early, building strong teams and staying flexible. It means using good data and choosing tools that improve control. Certainty does not only come from the market. It comes from how a project is set up. In 2026, the best results will come from those who plan for change, not just progress.
Rachel Personius is director of sustainability and construction business intelligence at Currie & Brown, a London-based firm with over 70 global offices providing project and cost management advisory services for the built environment.
