Major market developments this year include:
The average decoration cost increased by 10.8% year-on-year. Most markets experienced price increases in 2021, which fully reflected the extensive impact caused by the shortage of labor and raw materials; The interruption of supply chain and the obstruction of labor flow have accelerated the rise of prices. These core elements have been mentioned in all cities we investigated.
Although Tokyo has become the city with the highest decoration cost in the Asia Pacific region for five consecutive years, its decoration cost has decreased slightly by 1.3% year-on-year. Despite the rise in the cost of raw materials, the upward pressure on labor costs that have driven the price rise for many consecutive years has slowed down, and the decoration cost has also decreased. The price difference between Tokyo and the market closest to its decoration cost has shrunk by half.
In terms of local currency, the decoration cost of major cities in Australia increased by an average of 8%. These cities have long suffered from the rising cost of materials, and the epidemic prevention measures taken by the state government, including blockade and state border closure, undoubtedly increase the uncertainty of material delivery time, hinder the professional trade process within and between States, seriously affect the completion time of the project, and then frustrate customer confidence.
In Chinese mainland, electricity consumption and price increase are the main factors that affect the cost, which is mainly caused by the continuous rising of coal prices and strict carbon emission targets. In addition, driven by the normalized control of covid-19 epidemic, China has also promulgated some measures to curb the increase of confirmed cases, and the resulting impact has gone beyond China, but related to the whole Asia Pacific region.
Construction costs in major cities in India also rose sharply in 2021, especially electromechanical related costs. The second wave of epidemic in the first half of this year caused a devastating blow to India, resulting in a serious shortage of China State Construction Engineering Corporation Limited(601668) materials. With the gradual relaxation of epidemic prevention restrictions, the demand for building materials began to rise, but it was difficult for suppliers to respond quickly, which directly led to a large shortage of materials. The impact of the global epidemic on the supply chain further exacerbated this imbalance between supply and demand.
In some markets, fierce competition has eased the rising trend of construction costs. In Jakarta, the contractor adopted a radical price strategy because he was eager to obtain orders, which offset some of the increase in material costs. Therefore, the year-on-year increase in construction costs was relatively flat. The situation in Shanghai and Hong Kong is similar. Due to the remarkable effect of epidemic prevention measures and the calming of social events (for Hong Kong), the development of the two cities in the past year has been relatively stable, which not only enhanced customer confidence, but also reversed the downward trend of construction costs last year.
As far as the whole Asia Pacific region is concerned, customers’ willingness to spend on decoration is extremely differentiated. Due to the great impact of delta mutant virus in Southeast Asia, customer confidence and decoration consumption willingness have fallen seriously. Although there are signs that the epidemic situation has improved in the second half of the year, new investment decisions and major capital expenditures continue to be postponed in markets such as Bangkok, Ho Chi Minh City, Kuala Lumpur and Manila.
In 2021, the exchange rates of Australian dollar, RMB, Singapore dollar and new Taiwan dollar against the US dollar all strengthened. The depreciation of the yen and the Sri Lankan rupee against the US dollar offset the rise in local bid prices, but many countries that rely heavily on material imports have increased costs.
Decoration costs in various markets in the Asia Pacific region continue to differentiate significantly, ranging from US $1902 per square meter in Tokyo, Japan to US $669 per square meter in Ahmedabad, India.
