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Gulf construction costs close in on Europe

Warning of skills shortage for UAE as demand ramps up in Qatar and KSA

NEWS, Business, Human Resource, Construction costs, Qatar, Saudi Arabia, Skills shortage, Uae

Construction costs in parts of the Middle East are increasing and closing in on prices in parts of Northern and Western Europe, according to a new survey.

The 2012 International Construction Costs Report by quantity surveyor EC Harris has found that building costs in Qatar have been increasing rapidly, and that growing demand for skilled workers both in Saudi Arabia and Qatar could create a shortage that may lead to prices escalating in the UAE.

It said that although building costs in Saudi Arabia are currently much lower than in the UAE, the wave of new projects announced has led to an increase in demand which has seen prices in the Kingdon climb by 10%.

The annual study, which benchmarks building costs in 53 countries across the globe, found that construction costs were acting as a reliable bellwether for global economic trends, with Europe responsible for just five of the top ten most expensive markets in this year’s report, compared with eight in 2011.

Conversely, construction costs in markets that have been less impacted by the global recession are continuing to increase with countries like Canada, Australia and Qatar all moving up the league table compared with their 2011 position.

Mathew Riley, group head of cost and commercial at EC Harris, said: “Those countries that are least constrained by debt problems are continuing to invest in construction activities to help fuel their continued growth.

"In such a scenario the volume of work undertaken is creating an increased demand for both commodities and skills, which is inevitably driving costs upwards.

"In markets like Qatar where capital investment has been focused on long-term infrastructure projects, there will be a sustained pipeline of work which is likely to see construction costs rise even further on both a short- and medium-term basis”.

The survey also found that commodity prices have also been falling as global markets slow down and are expected to return to 2007 levels after a period of volatility.

Riley added: “Although certain commodities are set to become more affordable, some of these materials are still only available in finite volumes. Whether it’s securing access to commodities or to capacity and capability within the supply chain, the underlying message for clients is that they need to start planning ahead in order to guarantee continuity of supply.

"Unless they can provide early visibility of what they need to deliver their projects, there is a serious risk they may not be able to complete them on time or to the standard required.”

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Construction Week - Issue 749
Sep 15, 2019