Construction costs and machinery production costs both increased by 4.1% globally in 2025. Across regions, construction cost growth ranged from 9.2% in Africa to 2.7% in Australia and New Zealand, while machinery production costs rose between 9.8% in Africa and 1.8% in Europe. For 2026, both categories are expected to show some moderation, with global growth projected at 3.9% for construction costs and 3.7% for machinery production costs. Nevertheless, the outlook remains uncertain, largely due to ongoing geopolitical tensions and their possible impact on inflation and supply chains.

Graph: percentage change in construction and machinery costs in 2025 by continent. *Australia & New Zealand

Bron: Troostwijk Groep

Since early 2020, the economic environment relevant to the insurance and valuation market has changed profoundly. What began as a period of moderate inflation developed, from 2021 onwards, into a broad-based cost shock. This was driven by the after-effects of the COVID-19 pandemic and, particularly in Europe, by the economic consequences of Russia’s invasion of Ukraine. At the same time, inflationary pressures, largely linked to higher energy prices, translated into substantial wage increases, especially in higher-income economies.

For the insurance and valuation sector, this meant that declared values and sums insured became outdated much faster than many portfolios were prepared for. This applied not only to buildings, but also to machinery and technical equipment. As is often the case during periods of elevated inflation, however, these asset categories did not move in parallel.

Looking ahead to 2026, the data suggest that the exceptional price increases seen in recent years are beginning to ease in many markets. At the same time, the escalation of the conflict in the Middle East has increased uncertainty regarding the actual cost trajectory over the coming year.

For machinery production costs, our 2026 forecast points to average increases of approximately 1.5% in Europe, 4.7% in Asia, 8.0% in Africa, 2.0% in Latin America, 4.0% in the United States and Canada, and 2.6% in Australia and New Zealand.

For construction costs, projected average increases are approximately 3.1% in Europe, 4.6% in Asia, 8.6% in Africa, 3.6% in Latin America, 3.6% in the United States and Canada, and 3.1% in Australia and New Zealand.

Major risks for 2026 include the possible continuation of the conflict in the Middle East and other geopolitical tensions, which could materially affect price volatility and inflation. Should current price shocks become structural, they may add to already elevated global inflation levels and push the index upward by several additional percentage points. At the same time, slowing economic growth, already visible in parts of Europe, could also create deflationary pressures. The eventual interaction of these factors, together with a range of smaller influences, will determine the corrected indices scheduled for publication in 2027.

All figures are calculated in local currencies and are based on countries covered by Troostwijk Taxaties. Countries experiencing hyperinflation were excluded from the calculations, including Argentina, Suriname, Lebanon, Russia, Belarus, Bulgaria and Turkey. The International Cost Indices 2026 provided by Troostwijk are general figures and not related to a specific type of real estate or industry.

The content of the website and the International Cost Indices 2026 have been compiled with the utmost care. The content is regularly checked and updated. However, Troostwijk cannot be held liable for the accuracy, completeness, or currency of the website or the indices. In particular, Troostwijk cannot be held liable for any damage or consequences arising from the direct or indirect use of the website’s content.