JLL: Construction cost of Hong Kong industrial and logistics assets approaches US$2,500/sq m, over 60% higher than the Asia-Pacific average

Jones Lang LaSalle (JLL)'s newly released "2026 Global Construction Cost Index" report notes that industrial and logistics assets are among the most cost-effective building types, with a global average construction cost of US$1,010 to US$1,560 per square metre; however, the construction cost of comparable facilities in Hong Kong has now approached or even exceeded US$2,500 per square metre (equivalent to approximately HK$1,823 per square foot), more than 60% higher than the Asia-Pacific average. The reasons include tight land supply, complex site conditions, vertical building requirements and a strict regulatory framework, which together push development costs to levels that global benchmarks can hardly reflect. The report shows that construction costs in Asia-Pacific are now rising at a pace comparable to North America and faster than Europe, reshaping capital planning, development feasibility and asset feasibility in real estate markets. Construction cost inflation in Asia-Pacific remains high, with costs expected to rise by 3.8% to 4.7% in 2027, compared with 3.2% to 4.2% in North America and 2.2% to 3.5% in Europe. Huang Tianci, Head of Project Development Services at Jones Lang LaSalle (JLL) Hong Kong, said that although construction cost pressures are sweeping across Asia-Pacific, Hong Kong faces a particularly complex cost environment, reflecting the structural constraints on development and construction in one of the cities with the tightest land supply in the world. In the current high-cost environment, rigorous cost planning is key to maintaining project feasibility. Matt Bennion, Head of Project Development Services at Jones Lang LaSalle (JLL) Asia-Pacific, pointed out: "Looking ahead to 2027, many factors, led by geopolitical turmoil, are leaving developers in Asia-Pacific facing an extremely severe cost environment. Fragile supply chains, structural labour shortages, and strong demand for technical facilities triggered by the AI boom have combined to create cost pressures that exceed those in many Western markets. Delaying projects in the hope that costs will fall is no longer a wise move. Companies must adopt more flexible risk management and supply chain collaboration models to ensure projects remain feasible." Bennion continued: "Construction costs in Asia-Pacific have climbed to the top of the global range, and owners should plan properly rather than blindly wait for costs to fall. To continue generating returns in Asia-Pacific, owners must use real-time data to test feasibility from day one of a project and review it repeatedly at every design and procurement stage. At the same time, if renovation and repositioning strategies are superior to new-build projects in terms of cost, speed and carbon reduction benefits, they should be actively considered."