Revealed: Cost benchmarks for Dubai in Q3 2015
A cost benchmarking report released on 12 October indicates the price of construction materials has remained stable over the last year
Colliers International released the Q3 2015 Construction Cost Benchmarking for Dubai and Abu Dhabi on 12 October, 2015, which revealed that the price of construction materials has remained stable over the last year.
The benchmark, which provides a consolidated construction cost image of a proposed development type based on the historic movement of global construction commodity trends, movement in construction materials, shifts in manpower, and construction workload and competitiveness, recorded a variance of just -0.5% to + 1%, in the price of main construction materials.
Commenting on the report, Bob Flanagan, director and head of project management and cost consultancy for Colliers International's MENA operations, said: “Whilst the drop in oil prices has directly affected the cost of some materials, such as steel rebar, rising costs in other locally manufactured and imported materials, have balanced this out.”
According to the report, the largest material shift recorded over Q2 2014- Q2 2015 was steel bar, which witnessed a 14% drop.
Marginal increases were recorded in the price of aggregate & sand (+3.5%), blockwork (+1.5%), tiles & marble (+2.1%) , glass (+2.5%), and cement (+1%).
Construction labour, which includes skilled and unskilled site operatives, supervisors, and management staff, represents just under 30% of overall construction costs.
Therefore, going forward a 10% increase or decrease in labour will swing building costs by 3%.
Despite stability witnessed over the last year, a potential spike in construction prices cannot to be discounted, the company said.
The two factors that will determine a short term increase in construction prices are labour costs which may be influenced by rising inflation, and competition over resources available to deliver projects.
Flanagan explained: “If we see a significant increase in activity within the sector driven by the UAEs major infrastructure projects in addition to the preparation for Dubai Expo 2020, then we may see a bottleneck for resources, and this could result in a spike in construction pricing.
However, the current volatility in the oil markets leaves a question mark over capital spending priorities, which will come under review in 2015-16," Flanagan added.