January 27, 2017

Construction costs hike ‘could lead to higher UAE property prices’

An increase in building materials price could push up the prices of apartments, villas and office space, if not contained in the next few months, according to the boss of a Dubai-based construction firm.

Rizwan Sajan, founder and chairman of Danube Group and Danube Properties, said would-be home buyers should fast-track their buying decision, before developers and contractors start revising prices upwards to adjust to the new prices.

He said prices of steel, a major cost component in the building industry, has jumped 20 percent in the fourth quarter of 2016 compared to the start of the year.

According to market indices, prices of plywood increased by 5 percent and sanitary ware increased by 10-15 percent in the same period.

“The escalation of certain building materials prices will push the construction cost upwards that might have a knock-on effect on the property prices going forward,” said Sajan.

The global building materials market totalled about $800 billion in 2015, with the GCC accounting for approximately three percent of the market made up of stone, bricks, cement, concrete, glass, steel and aluminium.

Building materials suppliers serving the GCC can expect future growth, but it will be “lumpy”.

Sajan said: “The increase of building materials prices is an indication that the construction sector is growing at a higher pace as the building industry is expanding with new projects and properties.

“This reflects a healthy outlook for the construction and the real estate sectors. Going forward, the projects needed to support the Expo 2020 in Dubai and World Cup Football in 2022 to be held in Qatar, will keep the pace of demand up.

“Before the prices are factored in to the property prices, buyers should block their purchase with initial payments at current prices.”