Cement and building input prices will continue to rise by 10 per cent this year, predicted the head of the Building Materials Trading Group at the Dubai Chamber.
Ibrahim Al Rahmani explained the likely increase would be due to the high price of shipping and oil along with increasing global demand for building materials, especially in South East Asian countries and China, which is currently witnessing a big real estate boom in preparation for this summer’s Olympic Games.
“Demand for building materials increased in 2007 by 10 to 15 per cent, compared to 2006. It is expected the demand will rise in 2008.
“The market currently consumes large quantities of building materials. In spite of that, building materials are available in plenty. However, the increasing demand for them has highly contributed to price hikes, especially for iron. The price of one tonne of iron went up to Dh3,200, compared to about Dh2,200 in the middle of 2006. Most building materials saw similar increases in prices.”
Al Rahmani said Dubai imports building materials worth Dh60 billion each year and he said the price of the materials is under price pressure due to a shortage of workers, delivery delays due to traffic that have increased shipping costs and international competition.
“Some 40 per cent of building materials come from China, which is the main exporter of building materials. Five or six years ago, its share in the building materials market did not exceed five per cent,” he said.
“We, as exporters of building materials, face big competition from Chinese firms that started to invade markets directly and without a mediator. In the past, there were distributors of the products. But Chinese firms became available in the UAE’s markets and they market their products directly. That has led to a reduction in the sales of exporters.”
The head of the Building Materials Group said local firms need to upgrade their quality and service to remain competitive with the Chinese. He warned of illegal practices such as cheating buyers on the weight of products, which hurts the industry’s reputation.
“Commercial cheating is one of the biggest problems the sector faces. With the increase in the number of projects, a lot of local factories reduce the weight of materials but keep the same price. Only strict regulations will help protect consumers during this period of increased demand,” said Al Rahmani.
Price of building materials to go up