Sunday, January 22, 2017

Construction material prices stay stable in UAE

On average, construction material pricing in the UAE remained stable for a second consecutive year during 2016, according to the Colliers International Construction Cost Index.

In the context of overall construction costs, the 2016 movement in material prices represents a variance of -0.4 per cent to +1.2 per cent on 2015 costs, depending on the building type, design and specification, the report said.

Some of the more notable movements over the 12 month period from Q3 2015 to Q3 2016 include increases in aggregate and sand (+3pc), blocks (+6pc), concrete (+2pc), sanitaryware (+4pc), single core PVC insulated cables +5.6pc, glass and mirrors +5pc.

Materials that recorded a drop in price include cement (-3pc), timber (-7pc), diesel (-14pc), uPVC pipes (-11pc) and switches and sockets (-5.5pc), the index said.

The Construction Cost Index tracks the historic movement of the following: Global construction commodity trends;  movement in construction materials; shifts in manpower which include overheads; supervision staff, skilled and unskilled labour; construction workload and competitiveness.

The single biggest issue for the UAE contractors and sub-contractors at present is cashflow. Sustained delays in payment should not be viewed as a problem solely for the construction companies, it needs to be acknowledged as an issue that affects the industry as a whole, including stakeholders.

Widespread cashflow issues negatively impact the industry’s ability to deliver quality projects within budget and on time.

Weakening global construction commodity pricing over the past two years has given a much needed buffer to the industry. However, going forward commodities including crude oil, aluminium, iron ore and copper are predicted to gradually rise. This combined with fuel/subsidy cuts and the introduction of Value Added Tax (VAT) in January 2018, will put upward pressure on construction costs for the next 2 years, Colliers International said.

Colliers International Construction Consultancy provides project, cost and construction management services. - TradeArabia News Service

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