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30 May 2023

Dubai, Doha remain low construction cost locations

By Wam

The major cities of the Middle East – Doha and Dubai – remain some of the least expensive
cities in the world in which to build, according to the International Construction Costs Index published by Arcadis, the leading global Design & Consultancy firm for natural and built assets.

Regionally, Doha is the most expensive city for construction in the Middle East, followed by Jeddah and Dubai, respectively.  

The index, which analyzes the relative cost of construction across 44 major cities, finds that the local labor markets and resource availability have positively benefitted cities in the GCC. The findings also underline the impact of strong currency performance
and the fall in the price of oil in the Middle East.

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 centers of Doha and Dubai remain – for the time being, at least – relatively stable locations for developers, benefitting from access to inexpensive labor and energy."

In the Gulf region, Doha’s position as a major world city will progress quickly over the next decade whilst Dubai remains a major regional hub.

Over the next ten years in Doha, US$ 150 billion is expected to be spent on the like of roads, railways, stadiums and ports, as well as hospitality and social infrastructure. Moreover, the country has plans for further investment in transport infrastructure, water and electricity by 2020. Likewise, the Dubai airport surpassed London Heathrow as the busiest airport in the world and is becoming a major global destination. This together with Dubai Expo 2020, is expected to bring major economic benefits.

Williamson comments: "As we enter 2016, it is fair to say that we have another challenging year in prospect for the construction industry. With the steep fall in the price of oil, the timing of investment programs across the Middle East has become uncertain. Declining commodity prices, low labor 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 capitalize on their investment ambitions."

The findings provide an average price bracket for 13 different type 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. 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 labor markets and resource availability.