Tender costs set to increase

03 February 2015

Tender price inflation set to increase across the GCC as construction activity maintains steadiness amid falling oil prices

UK-based Mace Group predicts that tender price inflation is expected to rise across the UAE, Saudi Arabia and Qatar in the next three years.

The report claims that with the steady demand for construction in the UAE, it is likely that tender price inflation will remain stable at about 3 per cent for 2015 and 2016. But will increase to 4 per cent in 2016 as major projects in the build-up to the 2020 World Expo in Dubai begin to put pressure on resources.

In the case of Saudi Arabia, the report expects tender inflation to increase to about 5 per cent in the next three years.

The report also goes on to claim that inflation in Qatar is set to jump from 5 to 7 per cent by 2017. This surge comes as government plans surrounding the 2022 Fifa World Cup start to gather pace and continue to put pressure on resources.

In recent months and, since the fall of oil prices, Saudi Arabia, Qatar and the UAE have confirmed construction activity is projected to continue despite falling oil prices.

Saudi Arabia, for example, set a record budget for 2015 and is looking to press ahead with infrastructure and transportation projects. A royal decree on 29 December also confirmed that an additional $5.2bn was allocated for further energy and water projects across the kingdom.

The UAE and Qatar have also pledged a commitment to major project work in the coming years, as both nations prepare to host the Expo and world cup respectively.

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