August 15, 2022

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Construction costs will drop in the coming months, according to CBRE

© Reuters. Construction costs will drop in the coming months, according to CBRE

Madrid, August 5 (.) – The cost of building materials will begin to gradually decrease in the coming months, which will allow to adjust the increase recorded in the past two years, as reported on Friday by the consulting firm CBRE.

This gradual equilibrium will allow “the current cost overrun to eventually be absorbed in 2025”, explains Juan Pena, director of econometric forecasting at CBRE Spain.

In May, the cost of building materials was 38% higher than 2020 levels, although in the coming months “lower inflationary pressures in raw material markets should be reflected in costs,” CBRE reports.

For its part, higher costs will have a noticeable impact on the real estate sector, which in the case of new residential construction will have an impact on housing prices, specifically, CBRE estimates a rise of 6-8 percentage points.

With regard to non-residential work, there was an increase of approximately 30% compared to pre-pandemic levels in the budgets of each business.

For this reason, the impact on the activity affected both the implementation process and the business study, which is why CBRE recommends “implementing value engineering for the project to search for alternatives”.

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