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Doha, Dubai among cheapest cities for construction

GCC construction markets benefit from access to low-cost labour and energy, according to the Arcadis International Construction Cost Index

Doha (above) and Dubai are amongst the least expensive major cities in which to build, although regionally, they are amongst the most expensive.
Doha (above) and Dubai are amongst the least expensive major cities in which to build, although regionally, they are amongst the most expensive.

Doha and Dubai rank amongst the least expensive cities in the world for construction, according to the Arcadis International Construction Cost Index.

GCC markets benefit from access to low-cost labour and energy, according to the study.

Even so, the cities are amongst the most expensive in the Middle East when it comes to construction costs. Regionally, Doha is the most expensive city in which to build, followed by Jeddah and Dubai.

The findings of the index, which analyses the relative cost of construction across 44 major global cities, underline the impact of strong currency performance and the fall in the price of oil in the Middle East, according to Arcadis.

Commenting on the results, Ian Williamson, buildings global business leader at Arcadis in the Middle East, said: “Throughout 2015, the global construction market saw the overall level of cost inflation restricted due to the drops in commodity prices.

“Particularly when it comes to oil, growing uncertainty over prices will inevitably have a short- to medium-term impact on the GCC construction industry. The region’s major commercial centres of Doha and Dubai remain – for the time being, at least – relatively stable locations for developers, benefitting from access to inexpensive labour and energy,” he added.

The Netherlands-headquartered consultancy contends that Doha’s position as a major world city will “progress quickly” over the next decade, whilst Dubai will remain a “major regional hub”.

During the next 10 years in Doha, Arcadis expects $150bn (QAR546.18bn) to be spent on the likes of roads, railways, stadia and ports, and hospitality and social infrastructure projects. The company also points out that Qatar has plans for further investment in transport infrastructure, water, and electricity by 2020.

Meanwhile in the UAE, Dubai International surpassed London Heathrow as the busiest airport in the world, signifying the Emirate’s status as a major global destination. This, combined with Expo 2020, will result in major economic benefits, according to Arcadis.

Nevertheless, the consultancy has emphasised that the region’s construction markets will face significant challenges in the shorter term.

“As we enter 2016, it is fair to say that we have another challenging year in prospect for the construction industry,” said Williamson. “With the steep fall in the price of oil, the timing of investment programmes across the Middle East has become uncertain.

“Declining commodity prices, low labour rates, and a highly competitive Middle East construction market have given rise to more potential opportunities across newly-affordable markets. It is a good time for government, funders, and developers to capitalise on their investment ambitions,” he commented.

The findings of the Arcadis International Construction Cost Index provide an average price bracket for 13 different types of building in each location, including residential, commercial, and public sector developments. The index is based on construction costs only, and excludes land and finance.

Globally, Doha, Jeddah, and Dubai ranked 12th, 16th, and 18th most-expensive cities in the world for construction costs, respectively. New York is the most expensive major city in which to build, followed by London and Hong Kong.

Costs are calculated based on estimates made by Arcadis cost management experts around the world, and take into account the likes of currency values, commodity prices, local labour markets, and resource availability.

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Construction Week - Issue 738
Apr 21, 2019