Construction Cost Inflation Drops in Latam, Boosting Appeal

Turner & Townsend’s latest Global Construction Market Intelligence (GCMI) 2025 report reveals a promising outlook for Latin America’s construction sector. Despite global uncertainties in international trade and internal politics, the region is experiencing a gradual decline in construction costs, placing Latin American cities in the lower half of the ranking among the 99 global cities analyzed, a competitive advantage for investors.

Average construction cost inflation in Latin America is projected to drop from 7.16% in 2024 to 4.16% in 2025. Buenos Aires stands out with a significant decrease expected, from 30% inflation in 2024 to just 5% by 2026. This trend is driven by stabilized interest rates and the conclusion of major national elections in key countries such as Mexico, Brazil, and Colombia, which have reduced political uncertainty and created a favorable environment for investment.

Mexico continues to show strong momentum, with Mexico City consolidating itself as a strategic hub for corporate development in Latin America. The capital maintains competitive construction costs, averaging US$1,935 per m² with controlled cost inflation (3.6% in 2024 and an estimated 3.7% in 2025). Its strategic location and relatively low labor costs make it an attractive option for investors seeking efficiency, scale, and connectivity, especially amid supply chain reconfigurations and nearshoring trends.

Meanwhile, Monterrey shows stable inflation expectations, with a moderate increase from 5% in 2024 to 7% in 2026, reflecting steady growth in demand.

“Signs of returning stability have opened opportunities across various sectors, including mixed-use developments and housing, driven by a strong mining sector,” says Sergio Panero, Regional Real Estate Leader for Latin America, Turner & Townsend. He emphasizes the importance of looking beyond short-term political volatility and focusing on productivity, efficiency, and digital solutions to keep projects on track despite temporary uncertainties.

Panero also warns that “companies adopting new procurement and delivery models to control their supply chains and costs will gain competitive advantages and maximize growth potential across the region.”

In contrast to Latin America, the United States hosts five of the ten most expensive cities for construction worldwide. New York tops the list at US$5,744 per square meter, followed by San Francisco (US$5,504), Los Angeles (US$4,786), Chicago (US$4,695), and Philadelphia (US$4,604).