In 2023, the price of gold witnessed record highs, with expectations ranging between $1,500 and $4,000 per ounce, and an average forecast of $2,188 per ounce. These gains were fueled by several factors, including the strength of the US dollar, inflation, and geopolitical issues. During October alone, gold increased by 6.8%, recording the highest monthly close ever for the LBMA PM price. This rise in gold prices not only reflects geopolitical tensions but also indicates major changes in the global economy.
The direct impact of this rise in gold prices can be clearly seen in the architecture and construction sector. In 2023, the construction industry witnessed a significant increase in the costs of building materials, which in turn affected the cost of residential and commercial projects. This increase in costs is partly due to disruptions in supply chains as a result of the global pandemic, which has led to higher prices for key construction materials such as cement, diesel and asphalt. In addition, the construction cost per square meter in residential projects has witnessed a significant increase, which has increased construction costs for individuals. At the same time, the increase in the cost of materials has led to higher costs in commercial projects, which may lead to a reduction in the number of new projects.
It is worth noting that the Material Cost Index, an important tool for tracking these changes, also saw a significant rise in 2023. This rise in the material cost index reflects increasing challenges in the construction sector, as increasing material costs affect the competitiveness and financial sustainability of projects. As costs increase, companies have to reevaluate their budgets and strategies, which affects investment decisions and project planning.
Despite the challenges, the construction sector appears cautiously optimistic, supported by government infrastructure incentives, the renewable energy revolution, increased capital investments in strategic sectors, as well as post-Covid-19 plans. However, GlobalData expects global construction industry growth to remain sluggish in 2023, with an expansion of only 0.8%. Outside China, the industry is expected to contract by 0.1%, due to the weak economic backdrop and challenges specific to the global construction sector, such as rising construction material costs and labor shortages.
A major contributor to rising construction costs is disruptions to supply chains, largely resulting from the global pandemic. These disruptions have led to a rise in the prices of basic construction materials such as cement, diesel and asphalt, posing a major challenge to the construction industry. The impacts are not limited to the cost of materials, but also extend to the availability of some products, leading to delays in projects and further increased costs.
Amidst these challenges, technology has emerged as a powerful tool to mitigate these challenges. Digital solutions such as Building Information Modeling (BIM) and Virtual Design and Construction (VDC) are used to improve productivity, reduce waste, and streamline operations. These technologies contribute to reducing costs and improving construction quality, reflecting continuous adaptation and innovation in the sector.
In light of the significant rise in gold prices and its direct impact on construction costs, architects and consultants in the architecture sector are facing new and growing challenges. Their role now is to provide innovative solutions to overcome rising costs without compromising on quality and sustainability. This requires a flexible and strategic approach, where the focus is on cost-effective design, the use of alternative and sustainable materials, and improving construction methods.
In addition, the issue of the impact of artificial intelligence in the architecture sector emerges as a vital topic. While AI is sometimes viewed as a threat to traditional professions, it can also be viewed as a revolutionary tool that may reshape practices in architecture. By using AI in design and planning, architects can improve their efficiency and create more advanced and sustainable architectural designs. This shift towards adopting smart technologies is a crucial step towards the future of architecture, as it is believed that artificial intelligence may be the “final nail” in the evolution of the architecture profession that is adapting to the rapid changes in today’s world.
