Building Costs Per Square Metre in China 2025 to 2026 – Arcadis Guide

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Executive Summary

The Chinese construction market in 2025 represents a study in contrasts—while the real estate sector continues to face significant headwinds with declining investment and sales, infrastructure development and policy interventions are creating new opportunities for growth. According to the comprehensive data from Arcadis’s 2025 Cost Handbook, China’s construction industry is navigating a transition toward high-quality development driven by green building initiatives, prefabricated construction, and technological integration. This detailed analysis examines the cost structures across different building typologies in major Chinese cities, providing developers, investors, and construction professionals with critical insights for strategic decision-making. The construction cost data reveals notable regional variations, with Shanghai maintaining its position as the most expensive market for high-end residential and commercial developments, while emerging interior cities like Chongqing and Chengdu offer relative cost advantages. As we look toward 2026, the market is expected to stabilize further with continued policy support and a renewed emphasis on sustainable development, though material price volatility and debt risks in the real estate sector remain concerns that require careful management.

1. Introduction: China’s Construction Market in 2025

The Chinese construction industry in 2025 stands at a pivotal juncture, balancing between traditional growth models and innovative development approaches. Data from the National Bureau of Statistics indicates that in the fourth quarter of 2024, China’s GDP expanded by 5.0%, with the construction sector contributing 6.7% to the overall GDP. This growth is particularly remarkable considering the challenging backdrop of declining real estate investment, which fell by 10.6% year-on-year, and commercial building sales, which dropped by 17.1% by the end of 2024. The completed housing construction area decreased by 27.7%, while new commencement area fell by 23%, indicating a significant contraction in the traditional real estate development model.

Despite these challenges, construction output in 2024 experienced growth of 3.9%, primarily driven by infrastructure projects in transportation and industry. This divergence highlights the shifting focus of China’s construction industry from quantity-driven real estate expansion to quality-focused infrastructure development. The government’s policy interventions have played a crucial role in this transition. On September 29, 2024, the People’s Bank of China, together with the National Financial Regulatory Administration, introduced four financial policies to support a stable real estate market. These policies addressed critical areas including mortgage interest rates, down payment ratios, re-loans for social housing, and extension of terms for real estate financial policies.

The construction industry’s movement toward high-quality development is underpinned by several strategic policy initiatives. The “Implementation Opinions on Green and Low-Carbon Development of Urban and Rural Construction” and the “Action Plan for Smart Cities and Digital Buildings” have clearly articulated the core transformation goals of promoting prefabricated and green buildings. These policies are not merely aspirational but have practical implications for industry standards, market competitiveness, and ultimately, construction methodologies and costs.

The year 2025 is particularly significant as it represents a crucial milestone for the “14th Five-Year Plan.” Under this framework, public infrastructure projects such as new urbanization initiatives, transportation network expansion, and improvements to rural living environments are continuously emerging, providing substantial support for the construction market. This strategic pivot toward infrastructure and away from speculative real estate development has important implications for construction costs, labor markets, and material supply chains across the country.

The availability of labor and materials has also seen interesting developments. Construction wages have remained relatively stable, reflecting a balanced labor market despite the sectoral shifts. Meanwhile, material prices have exhibited mixed trends, with some key materials experiencing significant price decreases: steel prices declined by 12.0%, rebar by 14%, concrete by 10%, and cement by 7%. Conversely, copper and aluminum prices increased by 8% each, indicating divergent trends across different material categories.

Tender prices recorded a decrease of 2% in 2024, reflecting the competitive pressures in the construction market as companies adapt to the new market reality. Looking forward, the growth of construction wages is anticipated to remain stable due to a stable consumer price index, while material prices have settled at a lower level. However, the lingering debt risks facing many real estate companies suggest that caution will prevail in the market, contributing to our expectation that construction costs will remain generally stable throughout 2025.

This comprehensive analysis of building costs in China for 2025 draws upon detailed data from the Arcadis Cost Handbook to provide stakeholders across the construction value chain with the insights needed to navigate this evolving landscape successfully. The following sections will delve into quantitative cost analyses across building typologies and geographic markets, examine material and labor cost trends, and provide a strategic outlook for 2026.

2. Comprehensive Quantitative Analysis of Construction Costs in China

2.1 Residential Building Costs Across Chinese Cities

The residential construction sector in China demonstrates significant cost variations depending on building type, quality standard, and geographic location. The data reveals distinct patterns across different city tiers and development categories.

Table 1: Residential Construction Costs in Major Chinese Cities (US$/m² CFA)
Building Type	Shanghai	Beijing	Guangzhou/Shenzhen	Chongqing/Chengdu
Apartments, high rise, average standard	659 – 726	580 – 636	536 – 615	549 – 637
Apartments, high rise, high end	1,487 – 1,621	1,405 – 1,599	872 – 994	887 – 1,087
Terraced houses, average standard	910 – 991	830 – 899	813 – 972	754 – 885
Detached houses, high end	1,600 – 1,697	1,595 – 1,664	1,559 – 1,827	959 – 1,089

Shanghai maintains its position as China’s most expensive residential construction market, particularly for high-end developments. High-rise, high-end apartments in Shanghai command a premium of approximately 6-11% compared to Beijing and 70-83% compared to Guangzhou/Shenzhen. This premium reflects Shanghai’s status as China’s financial capital and its limited land availability, which drives up both land and construction costs.

The data reveals interesting patterns in the development strategies across different cities. While Shanghai and Beijing focus on premium residential projects, Guangzhou and Shenzhen show more moderate cost structures for high-end apartments, suggesting either different market expectations or more efficient construction methodologies. The Chongqing/Chengdu region offers the most cost-effective market for high-end detached houses, with costs approximately 40% lower than in coastal cities, reflecting lower land costs and less expensive labor markets.

Terraced houses, representing a middle ground between high-rise apartments and detached houses, show less dramatic regional variations, with costs in Chongqing/Chengdu approximately 17% lower than in Shanghai. This suggests that construction methodologies for this building type may be more standardized across regions, or that land costs constitute a smaller proportion of total development costs for these projects.

2.2 Office and Commercial Construction Costs

The office and commercial sector demonstrates different cost structures compared to residential developments, with significant variations based on building quality and function.

Table 2: Office and Commercial Construction Costs in Major Chinese Cities (US$/m² CFA)
Building Type	Shanghai	Beijing	Guangzhou/Shenzhen	Chongqing/Chengdu
Medium/high rise offices, average standard	845 – 1,116	827 – 1,114	761 – 869	868 – 997
High rise offices, prestige quality	1,085 – 1,484	1,344 – 1,829	1,114 – 1,400	1,094 – 1,455
Retail malls, high end	1,147 – 1,546	1,118 – 1,539	1,084 – 1,571	1,044 – 1,441

Beijing stands out as the most expensive market for prestige quality office developments, with costs 15-23% higher than Shanghai for this category. This premium likely reflects the concentration of headquarters operations, stricter building requirements, and higher quality expectations in the capital city. Interestingly, Shanghai shows a smaller cost differential between average standard and prestige quality offices (28-33% increase) compared to Beijing (62-64% increase), suggesting different market segmentation strategies in these two leading cities.

The retail sector shows more consistent costs across cities, with high-end retail malls ranging from US$1,044/m² in Chongqing/Chengdu to US$1,546/m² in Shanghai. The relatively small differential (approximately 32% between cheapest and most expensive) compared to the residential sector suggests that fit-out costs and brand standards may create a cost floor that reduces geographic variations for high-end retail developments.

2.3 Hospitality Sector Construction Costs

The hospitality sector demonstrates considerable cost variations based on hotel classification and target market segment.

Table 3: Hotel Construction Costs in Major Chinese Cities (US$/m² CFA)
Hotel Category	Shanghai	Beijing	Guangzhou/Shenzhen	Chongqing/Chengdu
Budget hotels – 3-star, mid market	924 – 1,127	915 – 1,127	977 – 1,108	943 – 1,152
Business hotels – 4/5-star	1,489 – 2,016	1,558 – 2,058	1,579 – 2,324	1,693 – 2,093
Luxury hotels – 5-star	2,014 – 2,407	1,984 – 2,553	2,125 – 2,415	2,083 – 2,477

The budget hotel segment shows remarkable cost consistency across cities, with a narrow range of US$915-1,152/m², suggesting highly standardized construction approaches and operational requirements for this segment. The minimal variation (approximately 21% between lowest and highest) indicates that budget hotel operators have successfully developed standardized models that can be deployed nationally with minimal cost adjustments.

In contrast, the business and luxury hotel segments show greater cost variations, particularly in the upper range of the spectrum. Guangzhou/Shenzhen demonstrates the highest maximum costs for business hotels (US$2,324/m²), reflecting the premium placed on hotel developments in these southern commercial hubs. Luxury hotels show the most consistent pricing across cities, with all major markets exceeding US$2,000/m² and reaching up to US$2,553/m² in Beijing.

The data suggests that while budget hotels compete primarily on operational efficiency, luxury hotels compete on quality and exclusivity, allowing for greater cost variations based on specific location, brand positioning, and design aspirations.

2.4 Industrial and Specialized Construction Costs

Industrial construction costs show dramatically different patterns compared to residential and commercial developments, with significantly lower cost structures and different geographic variations.

Table 4: Industrial Construction Costs in Major Chinese Cities (US$/m² CFA)
Building Type	Shanghai	Beijing	Guangzhou/Shenzhen	Chongqing/Chengdu
Industrial units, shell only	260 – 319	255 – 311	290 – 357	430 – 534
Owner operated factories, low rise	402 – 504	494 – 566	N/A	N/A

Contrary to patterns observed in other sectors, industrial construction costs are actually highest in the Chongqing/Chengdu region, with shell-only industrial units costing 65-85% more than in Shanghai and Beijing. This surprising inversion of the typical cost hierarchy may reflect several factors: less developed supply chains for industrial construction materials in interior regions, higher transportation costs for specialized components, or newer industrial parks with higher infrastructure standards.

The data for owner-operated factories is only available for Shanghai and Beijing, with Beijing showing costs approximately 23% higher than Shanghai for this category. This premium may reflect stricter environmental and safety requirements in the capital region, or higher specifications for factories serving the Beijing market.

Table 5: Specialized Construction Costs in Major Chinese Cities (US$/m² CFA)
Building Type	Shanghai	Beijing	Guangzhou/Shenzhen	Chongqing/Chengdu
Underground/basement car parks (<3 levels)	690 – 963	706 – 776	507 – 829	396 – 549
Multi storey car parks, above ground (<4 levels)	354 – 494	425 – 429	361 – 409	316 – 386
Schools (primary and secondary)	528 – 666	492 – 635	408 – 530	419 – 461
Students’ residences	386 – 527	348 – 492	376 – 479	293 – 419
Sports clubs, multi purpose sports/leisure centres	890 – 1,093	842 – 850	699 – 792	661 – 724
General hospitals – public sector	1,360 – 1,754	1,107 – 1,387	1,058 – 1,364	1,056 – 1,308

Specialized construction categories show diverse cost patterns across cities. Underground car parks are most expensive in Shanghai (up to US$963/m²) and cheapest in Chongqing/Chengdu (as low as US$396/m²), reflecting the differential costs of excavation, waterproofing, and ventilation systems across these markets.

Educational facilities show relatively moderate cost variations, with schools ranging from US$408/m² in Guangzhou/Shenzhen to US$666/m² in Shanghai. This 38% differential is smaller than in many other categories, suggesting that educational construction may be subject to standardized requirements or government specifications that limit cost variations.

Healthcare facilities show interesting patterns, with Shanghai demonstrating significantly higher hospital construction costs (32-34% higher than other cities), possibly reflecting more advanced medical infrastructure requirements, higher equipment standards, or more challenging site constraints in dense urban environments.

3. Material and Labour Costs Analysis

3.1 Construction Material Price Trends

The year 2024 witnessed significant fluctuations in construction material prices, creating both challenges and opportunities for developers and contractors. According to the Arcadis data, basic construction product prices experienced mixed trends:

Steel: -12.0%
Rebar: -14.0%
Concrete: -10.0%
Cement: -7.0%
Copper: +8.0%
Aluminum: +8.0%

The substantial declines in steel, rebar, concrete, and cement prices reflect multiple factors including reduced demand from the struggling real estate sector, improved production efficiencies, and lower energy costs. The decline in these fundamental construction materials has contributed significantly to containing overall construction cost inflation despite other economic pressures.

Conversely, copper and aluminum prices increased by 8%, reflecting strong demand from the electrical, renewable energy, and technology sectors. This divergence highlights how construction costs are influenced by global commodity markets and industrial demand beyond the construction sector itself.

The stabilization of material prices at lower levels has provided some relief to construction companies facing margin pressures from competitive tender environments. However, the volatility in material prices continues to pose risk management challenges, particularly for fixed-price contracts spanning extended periods.

3.2 Labour Cost Dynamics

Construction wages in China have remained remarkably stable despite the market turbulence in the real estate sector. This stability can be attributed to several factors:

Balanced Labor Supply: The construction workforce has adjusted to reduced demand through natural attrition and transition to other sectors, preventing significant wage depreciation.
Government Policies: Initiatives supporting infrastructure development have maintained sufficient demand for construction labor to prevent widespread unemployment and wage collapse.
Skill Premiums: Specialized trades and skilled workers continue to command wage premiums, particularly in technically complex infrastructure projects.
Regional Variations: Labor costs show significant regional variations, with coastal cities maintaining approximately 15-20% wage premiums compared to interior regions, reflecting differences in living costs and development priorities.

The stability in construction wages amid falling material prices has altered the cost structure of construction projects, with labor representing a larger proportion of total costs than in previous years. This shift has important implications for productivity measures and the economic case for construction automation and prefabrication.

3.3 Tender Price Trends

Tender prices recorded a decrease of 2% in 2024, reflecting the competitive pressures in the construction market. This decline, while modest, represents the first decrease in recent years and signals a shift in market dynamics from the previously overheated conditions.

Several factors contributed to this tender price decline:

Increased Competition: With reduced activity in the real estate sector, contractors are competing more aggressively for available projects, particularly in the infrastructure space.
Lower Material Costs: Contractors have been able to reduce bids while maintaining margins due to lower material costs.
Efficiency Improvements: Construction firms have invested in productivity improvements and prefabrication to remain competitive in a challenging market.
Risk Assessment: Contractors are factoring in lower risk premiums due to reduced uncertainty about material price escalation.

The tender price decline varies across project types and regions, with infrastructure projects generally maintaining more stable pricing than commercial real projects due to different competitive dynamics and client expectations.

4. Regional Comparative Analysis of Construction and Utility Costs

4.1 Cross-City Construction Cost Comparisons

The Arcadis data reveals fascinating patterns when construction costs across Chinese cities are compared systematically. Shanghai consistently emerges as the most expensive market across most building categories, particularly for high-end developments. Beijing follows closely, with a notable premium for prestige office developments. Guangzhou and Shenzhen present an interesting case—while generally more cost-effective than Shanghai and Beijing for residential projects, they command premiums for certain commercial and hospitality developments.

Chongqing and Chengdu represent a developing cost frontier, with significantly lower costs for many building types while still maintaining quality standards. The cost differential between coastal cities and these interior hubs ranges from 15-40% depending on building type, offering compelling opportunities for cost-conscious developers.

The patterns suggest that construction costs correlate not only with economic development levels but also with specific local factors including land availability, regulatory requirements, labor skill levels, and supply chain maturity. Cities with established construction ecosystems and high quality expectations (Shanghai, Beijing) naturally incur higher costs, while emerging hubs can leverage cost advantages to attract development investment.

4.2 Utility Costs Across Major Chinese Cities

Utility costs represent an important component of lifetime building expenses and show significant variations across Chinese cities.

Table 6: Utility Costs in Major Chinese Cities (Q4 2024)
City	Electricity (Domestic)	Electricity (Commercial/Industrial)	Water (Domestic)	Water (Commercial/Industrial)	Diesel	Unleaded Fuel
Hong Kong	0.12 US$/kWh	0.14 US$/kWh	0.83 US$/m³	0.59 US$/m³	3.21 US$/l	3.33 US$/l
Macau	0.18 US$/kWh	0.18 US$/kWh	0.56-0.91 US$/m³	0.76 US$/m³	1.99 US$/l	1.82 US$/l
Shanghai	0.134 (peak)/0.042 (normal) US$/kWh	4.66 Basic Tariff + 0.081 (Summer)/0.076 (Non-Summer) US$/kWh	0.472-0.799 US$/m³	0.681 US$/m³	0.968 US$/l	1.079 US$/l
Beijing	0.059-0.097 US$/kWh	0.167-0.169 (peak)/0.104-0.106 (normal) US$/kWh	0.609-1.097 US$/m³	1.097-1.156 US$/m³	0.978 US$/l	1.085 US$/l
Guangzhou	0.081-0.121 US$/kWh	0.040-0.252 US$/kWh	0.271-0.542 US$/m³	0.474 US$/m³	0.973 US$/l	1.107 US$/l
Chongqing	0.072-0.112 US$/kWh	0.089-0.205 US$/kWh	0.414-0.879 US$/m³	0.600 US$/m³	0.970 US$/l	1.085 US$/l

Hong Kong stands out as having the highest utility costs, with electricity prices 2-3 times higher than mainland cities and fuel costs 3 times higher. This premium reflects Hong Kong’s special status as a territory with limited domestic energy resources and different taxation policies.

Among mainland cities, utility costs show less dramatic variations, though interesting patterns emerge. Beijing has the highest water costs for commercial/industrial users at US$1.156/m³, reflecting the water scarcity challenges in northern China. Shanghai employs the most complex electricity pricing structure with significant differentials between peak and normal rates, providing economic incentives for load shifting.

Fuel costs are remarkably consistent across mainland cities, with unleaded fuel ranging from US$1.079-1.107/litre, suggesting national pricing policies and efficient distribution networks for petroleum products.

These utility cost differentials have implications for building operational expenses and life-cycle cost analyses. Developers in high-cost cities face greater pressure to implement energy efficiency measures, while buildings in cities with tiered pricing structures benefit from sophisticated energy management systems.

5. Outlook for 2026: Trends, Predictions, and Strategic Recommendations

5.1 Construction Cost Projections for 2026

Based on current trends and policy directions, construction costs in China are expected to remain generally stable in 2026 with moderate increases of 2-4% across most building categories. This projection assumes continued policy support for the construction sector without significant overheating of material markets.

Several factors will influence cost trajectories in 2026:

Material Price Recovery: After significant declines in 2024, material prices are expected to stabilize and potentially experience modest increases as inventory adjustments conclude and demand from infrastructure projects continues.
Wage Moderate Increases: Construction wages are projected to increase by 3-5% as skilled labor remains in demand for infrastructure projects and specialized construction applications.
Prefabrication Impact: Increased adoption of prefabricated construction methods may exert downward pressure on costs for certain building types as standardization and factory efficiencies reduce onsite labor requirements.
Environmental Compliance Costs: Stricter environmental standards may increase costs for compliance, particularly for energy efficiency, emissions control, and sustainable material sourcing.

The cost trends may diverge significantly across building types, with infrastructure and industrial construction likely experiencing higher cost increases due to strong policy support, while commercial real estate may continue to see competitive pricing pressures.

5.2 Policy Impacts and Market Evolution

The policy environment will continue to play a decisive role in shaping construction costs and market dynamics in 2026. Several policy initiatives deserve particular attention:

Green Building Mandates: The implementation of green building standards across more cities and building types will increase upfront costs but potentially reduce operational expenses, changing the cost structure over building lifecycles.
Prefabrication Promotion: Government policies promoting prefabricated construction may accelerate cost reductions for standardized building types through economies of scale and learning curve effects.
Financial Support Measures: Continued financial policies supporting real estate market stability may prevent further deterioration in construction demand, providing a floor under construction costs.
Urbanization Initiatives: New urbanization projects and transportation infrastructure investments will create regional hotspots of construction activity with corresponding cost implications.

Market evolution in 2026 will likely continue the trends established in 2024-2025, with infrastructure taking a larger share of construction activity compared to traditional real estate development. This shift will require construction firms to adapt their capabilities, cost structures, and competitive strategies to align with the changing market composition.

5.3 Strategic Recommendations for Stakeholders

Based on the cost analysis and outlook, we offer the following strategic recommendations for different market stakeholders:

For Developers:

Leverage cost differentials between coastal and interior cities for strategic positioning
Invest in energy efficiency measures to mitigate high utility costs in certain markets
Consider prefabricated construction methods for cost predictability and schedule certainty
Conduct thorough life-cycle cost analyses that factor in operational cost variations across cities

For Contractors:

Develop specialized capabilities in infrastructure projects to align with market shifts
Invest in productivity enhancements to offset wage inflation pressures
Implement sophisticated supply chain management to navigate material price volatility
Consider strategic positioning in interior cities where competition may be less intense

For Investors:

Factor in construction cost variations when evaluating development opportunities across cities
Consider the impact of utility costs on operational expenses and asset valuations
Monitor policy developments for signals about future market directions and cost implications
Balance risk exposure between developed and emerging city markets

For Policy Makers:

Consider regional cost variations when designing development incentives
Monitor material price trends for potential impacts on affordable housing goals
Support productivity initiatives that can help contain construction cost inflation
Balance environmental goals with cost impacts on development viability

6. Conclusion

The Chinese construction market in 2025 presents a complex landscape of challenges and opportunities. The comprehensive cost data from Arcadis reveals significant variations across building types and geographic markets, providing valuable insights for strategic decision-making. While the real estate sector continues to face headwinds, infrastructure development and policy support are creating new avenues for growth.

The stabilization of construction costs in 2025, driven by moderated material prices and stable labor costs, provides a relatively predictable environment for development planning. However, the regional variations in costs suggest that strategic location decisions can significantly impact project economics.

Looking toward 2026, the market is expected to continue its transition toward more sustainable, efficient, and technology-enabled construction approaches. Stakeholders who successfully navigate this transition while managing cost pressures will be well-positioned to capitalize on the opportunities in China’s evolving construction landscape.

The data and analysis presented in this report provide a foundation for informed decision-making, but market participants should supplement this information with local knowledge and ongoing monitoring of market developments. The construction cost environment remains dynamic, and success will require adaptability, strategic clarity, and operational excellence.