Construction costs in these major European cities are rising as the continent faces shortages in construction labour, raising concerns in economic and urban development spheres. Cities like London and Dublin currently grapple with major housing shortages. In Zurich, thousands demonstrated against the Swiss housing problem at the end of 2024, when tenants’ leases were abruptly terminated at three Zurich flats.

The soaring costs of building new infrastructure – including new data centres as demand for AI surges – are also affecting commercial development. This in turn reshapes how governments and investors are approaching urban growth. Despite lower energy costs, labour shortages are a glaring problem in nearly all the countries these cities are located in, along with rising material costs, supply chain disruptions, and increased interest and inflation.