Trump 2.0: The First 100 Days | EMEA

Construction Firms Faced with Higher Costs Construction Costs

Impact on CRE

• Tariffs on key construction materials such as steel and aluminium are expected to place additional strain on project budgets across the CRE sector. • However, the impact will vary by asset type as not all sectors are equally exposed to rising construction costs. • Sectors like industrial and data centres, which, in recent years, have delivered higher returns and stronger rental growth, may be better positioned to absorb these cost increases. Their higher margin profiles provide more flexibility to manage elevated input prices. • In contrast, sectors such as office and retail often operate within tighter financial margins, making them more vulnerable to fluctuations in construction costs. As a result, these sectors are more likely to experience delays in development or a strategic pivot toward refurbishing existing assets rather than pursuing new ground up developments.

Producer Prices in Industry

Producer Price & Cost Indices

80

130

120

60

110

40

100

20

90

% Y/Y

0

80

Index, 2021=100

-20

70

-40

60

Jul-2011

Oct-2015

Apr-2007

Apr-2024

Jan-2003

Jun-2004

Jan-2020

Jun-2021

Mar-2017

Feb-2010

Nov-2005

Dec-2012

Nov-2022

Sep-2008

Aug-2018

2005 Q1

2006 Q2

2007 Q3

2008 Q4

2010 Q1

2011 Q2

2012 Q3

2013 Q4

2015 Q1

2016 Q2

2017 Q3

2018 Q4

2020 Q1

2021 Q2

2022 Q3

2023 Q4

May-2014

Industry (except construction) Manufacture of basic iron & steel Aluminium production

Costs

Producer prices

Source: The World Bank, Eurostat

CONTENTS

Cushman & Wakefield