New projects are not expected to drive up costs

28 June 2016

Contractors say they have the resources to deliver Dubai’s Expo building schemes

With Dubai planning to start and finish so many projects ahead of the 2020 Expo, inevitable questions on resourcing and prices have started to be raised.

A contract award for the metro extension running to the Expo site is expected by the Roads and Transport Authority (RTA) before the end of Ramadan, infrastructure work at the Expo site itself is due to start during the summer, and before the end of the year construction work is set to start with the enabling works package for the $33bn expansion of Al-Maktoum International airport.

Building work is also set to start by the end of this year on major new projects such as Nakheel’s new mall on its Deira Islands development, the Sheikh Mohammed bin Rashid Library that is being delivered by Dubai Municipality, as well as a long list of smaller residential and hotel buildings.

Next year, the awards are expected to continue, most notably on major projects such as the tower and mall and Emaar Properties’ Dubai Creek Harbour, as well as the One Zabeel tower planned by the Investment Corporation of Dubai.

While some consultants expect a short term spike in pricing if all these projects move ahead, contractors do not anticipate rising prices. They say that the increase in workload is not a surprise and although a large volume of work is set to move ahead, supply chain bottlenecks are not expected as there is enough resource in the market. Other contractors say that with such constrained liquidity conditions clients are unlikely to move ahead with projects unless they receive competitive prices.

It is also important to remember that also the amount of work planned in Dubai, it still falls well short of the volume of work that was ongoing in 2007 and 2008 during the emirate’s property boom. That said, construction is not an entirely localised industry. Any change in commodity prices will be passed on. In recent months there has been an increase in steel prices which have driven up costs, and any other increases in steel or other commodities or materials will put upward pressure on prices.


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