Global construction costs are settling into a permanently higher baseline, altering real estate capital planning, development feasibility and asset viability across sectors worldwide. According to JLL’s “Global Construction Costs Index 2026” report, global pressures on the industry have established a new annual cost escalation baseline of 3 percent to 6 percent, well above the pre-2020 norm of 2 percent to 3 percent.
Complex interactions between global supply chains, politics, AI-driven demand and a wide array of local factors are generating constant upward pressure on costs, even if the underlying source or trigger is not exactly the same month to month. As a result, real estate investors, developers and occupiers can no longer rely on static cost assumptions or attempt to wait out the market through project deferrals.
“The issue facing real estate developers and investors is oper
