UK consultant says construction costs in GCC have been relatively stable this year
The full impact of the trade embargo imposed on Qatar by Saudi Arabia, Bahrain and the UAE has yet to be realised, says UK consultant Mace.
“We have yet to see the full impact of the current blockade on the construction industry in Qatar, particularly as it relies heavily upon a large quantity of materials being imported from Saudi Arabia and the UAE,” says Fergus Rossiter, director of Mace Cost Consultancy.
The trade restrictions were imposed on Qatar in early June and there have been persistent concerns about the vulnerability of the country’s supply chain to sanctions. Contractors say about 50 per cent of materials and equipment used in Qatar are transported into the country across its only land border with Saudi Arabia.
Delays have been another concern, although in late August, the Washington-based IMF said Qatar has mitigated delays to key infrastructure projects caused by the trade embargo.
For Qatar and the rest of the GCC, Mace says construction costs have been relatively stable during the first half of this year.
The firm says tender prices increased by 1.7 per cent in Bahrain, 0.4 per cent in Kuwait, 1.8 per cent in Oman, 2.1 per cent in Qatar, 2.5 per cent in Saudi Arabia and 1.2 per cent in the UAE.
Mace says the stable pricing is a result of a competitive pricing environment due to fewer contract awards when compared with previous years. “Continuing the trend from 2016, the first half of 2017 has been competitive for the Mena [Middle East and North Africa] construction market due to the low oil prices resulting in restricted government spending across the region,” says Rossiter.
Tender prices could increase during the second half of this year as key markets continue to drive ahead with projects supporting large-scale events and recent material price increases take effect.
“… As the work for upcoming major events starts to ramp up, notably Expo 2020 in the UAE and the Fifa football World Cup 2022 in Qatar, we are starting to see an increase in tender prices, which is further fuelled by recent growth in material prices, such as for reinforcement steel,” says Rossiter.