UAE construction costs remain stable

07 October 2015

Steel price fall offset by increases for other materials

  • Construction costs in Dubai and Abu Dhabi remain stable
  • Competition keeps contractor margins down
  • UAE projects market has declined substantially in 2015

Construction costs in Dubai and Abu Dhabi have been stable over the past year, says a report by UK property consultancy Colliers.

“The single biggest change when comparing the second quarter of 2014 with the second quarter of 2015 is a drop of circa -14 per cent in the price of steel bar,” the report says. “However, this is balanced by an increase in the price of aggregate and sand (+3.5 per cent), block work (+1.5 per cent), tiles and marble (+2.1 per cent), glass (+2.5 per cent), and cement (+1 per cent).

A slowdown in the volume of contract awards in Dubai and Abu Dhabi has meant contractors have not increased margins.

“To date in 2015, we have not yet reached a level of activity in the industry so as to put upward pressure on construction companies to increase profit margins,” says Colliers.

According to regional projects tracker MEED Projects, the UAE’s projects market has declined substantially this year, with a value of $17.3bn during the first half of 2015, down 44.4 per cent on the same period last year.

IMF urges project spending as UAE economy cools in 2015

The UAE should continue to invest in projects as economic growth slows during 2015 due to lower oil prices, sluggish global growth and volatile emerging markets.

The Washington-based IMF concluded an Article IV consultation with the country on 29 July and said: “Lower oil prices are eroding long-standing fiscal and external surpluses, but the UAE has continued to benefit from its perceived safe haven status and large fiscal and external buffers that have helped limit negative spillovers from lower oil prices, sluggish global growth, and volatility in emerging market economies.” Read more

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