Construction cost increase derived from labor and material price hike hinders redevelopment projects nationwide, an industry association study found. Changes of contracts are inevitable in some under-construction developments and many yet-to-be-started projects have to undergo modification of the initial plans or postponement of groundbreaking.

Urban Renewal Association of Japan conducted a questionnaire to investigate impacts of cost rise on projects. 80% of respondents including land owners groups, construction contractors, developers and local governments implementing construction phase reported price increase of materials and labor and 70% answered that they had trouble in hiring workers. Nearly 80% of the project owners that have not made construction contracts decided to alter their plans.

According to the Land Ministry, average construction cost per square meter rose 14% from 168,000 yen to 191,000 yen in recent three years. (2014/11/10)