Industry at risk from inflation
Inflation one of biggest threats to region's construction sector, says Emaar's director of construction.
Inflation is one of the biggest risks the construction sector faces, according to Emaar's director of construction, Hussam Assaf.
He said that rates were at a 15-year high, while inflation has caused land prices to balloon from US $410 (AED 1,056) per m2 to $1,112.7 per m2 in just five years.
Assaf added that volatile steel prices were also a big risk for the industry. Steel had tripled in price from $228.8 per tonne in 2002 to the current $653.6.
Speakers at the Project Risk Management conference organised by MEED also warned governments in the region to take a 'leadership' role when it comes to their country's development.
According to Dominic McPolin, executive coordinator, Ministry of Works and Housing in Bahrain, Bahrain's government recently drew up a masterplan to make sure the country avoided the 'ad-hoc' development which has taken place in Dubai.
He said that governments in the Middle East need to follow this example.
"Governments need to move from regulators to a leadership role," he said.
Another risk facing the industry are the difficulties in overcoming traditions during the negotiation process, according to Peter Walder, commercial director of recruitment and consultancy firm, Profile Group.
"You need to be aware of how contract negotiations are handled in other parts of the world rather than just following the model of the Anglo-Saxon world," said Walder.
"What we are seeing now is a lot of lawyers and consultants coming to Dubai. I'm not saying they are ambulance-chasing as such, but they are coming into a situation which they see as ripe."