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Labour accommodation costs on the increase

As rents increase and the labour ministry limits the number of workers who can share a room, construction companies are scrambling to find additional space to house their staff.

ANALYSIS, Human Resource

As rents increase and the labour ministry limits the number of workers who can share a room, construction companies are scrambling to find additional space to house their staff.

Rents for labour accommodation have gone up by more than 40% since last year, according to a Dubai based contractor.

A room in a labour camp that can accommodate four workers with about 3m² of area per person can now go up to about US $1,360 per month as opposed to about $950 per month when compared to last year. Five years ago, the same room could have been rented out for $190 per month.

 

The rents of labour camps are going up very quickly; “Build your own''. - Robin Walker, Khansaheb Civil Engineering

Speaking to Construction Week, Ani Ray, country head, Simplex Infrastructure said: "Earlier, the authorities would give land to construction companies to build labour camps on, but now with the real estate boom it has stopped doing that and has instead made the land available to anyone to purchase.

This has contributed to the problem in a big way. People are now buying this land, building labour camps on them and leasing them out. It has become a commercial transaction.

"In fact, the most profitable industry in real estate at the moment is labour camps. Your return on investment (ROI) is less than two years whereas for a commercial building, the ROI is five to seven years and a residential one is 10 years.

To curb the problem, Ray suggested that the authorities only give land to construction companies to build their labour camps so that the end user receives the benefits and not the middle man.

"In Abu Dhabi, the government is building labour camps to support the construction companies," he added.

Another problem cited by some construction companies, even though they support the move, is the amended labour law that stipulates the sharing of no more than eight people to a room.

Earlier, some companies would pack 10 to 12 workers into small rooms with less than 3m² of space per worker.

A circular from the Dubai Municipality (DM) sent out to various engineering consultants in Dubai stated that designs for labour camps would only be approved if they, "provide at least 3.72m² of space for every labourer staying in a labour accommodation, and at least one bathroom for every eight labourers - which is the maximum number of labourers that can be accommodated in one room."

The circular also banned the use of temporary structures to house labourers and materials containing asbestos or that were harmful to the environment or public health.

According to the circular, the labour accommodations will also have to include necessary furniture such as single beds and clothes cabinets for each labourer.

As in all other residential buildings, there has to be enough ventilation, natural or artificial light, thermal insulation, drainage, water supply, gas, electric supply, fire-safety measures, and health and environment preconditions.

All rooms, kitchens, dining rooms, and other halls will have to be air conditioned.

Toilets and bathrooms will have to be furnished with clothes hangers, soap containers, exhaust fans, hot water, mirrors, and cabinets while the water tanks will have to be covered by sun shades to ensue cool water during summer.

An adequate number of water coolers are now also compulsory depending on the number of labourers residing there.

Speaking to Construction Week, Aju Sharfuddin, HSE manager of Abu Dhabi-based construction company, Civilco, said: "We have about five or six camps in each area in Dubai and Abu Dhabi now.

We've had to spend an extra $816,000 on renting out new camps to accommodate our workers according to the specifications. We abide by the law completely as the labour ministry is conducting checks every month. It was a big burden to us initially, but we are in full support of the move."

A good indication of the labour camp shortage is the job list of turnkey labour accommodation specialist Al Masaood Bergum, which is chasing new jobs around the region and has plans to buy, construct and then operate its own labour camps which it would then lease out, according to its general manager, Steve McConnachie.

"We are bidding on some large projects in Abu Dhabi - a 40,000, 42,000 and 60,000-man facility," he said.

The projects that the company is bidding for in Abu Dhabi are with Aldar, Leighton, TDIC, and the Abu Dhabi Ports Authority.

"These are projects that we're looking at working on by ourselves and with AMB Mead, our new joint venture," added McConnachie.

"As a partnership, we're looking at getting the land and building these camps ourselves, and then owning and operating them.

"We're also quoting for two projects in Ras Al Khaimah.

One of them is for the LNG project in RAK, while in Dubai, we're quoting an 8,000 and 12,000-man facility, all connected with projects in Dubailand," he added. He also said that based on the specifications and the fact they're being built turnkey, along with the spacing requirement that Dubai and Abu Dhabi municipalities now require, the cost per man to build a labour township, is working out to be about US $10,000 (AED 36,700) a man.

But Robin Walker, chief estimator, Khansaheb Civil Engineering, said his company is least affected by the new regulations.

"We are building new camps in Jebel Ali for ourselves right now but to be honest, the new laws didn't really affect us much because our standards are already higher than is required," Walker said.

For example, we've never had more than eight people sharing a room anyway, but yes, the rents of labour camps are going up very quickly; I'd say, ‘Build your own'."

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