Construction costs in the GCC are less than in major developed markets, according to the UAE-based Hyder Consulting, the firm behind Burj Dubai and Emirates Towers developments.
Andy Davids, the company’s technical director of structures in the Middle East, said contrary to popular belief construction costs are lower in the Gulf than in Europe, North America and some countries in Asia.
This is due to the lower cost of importing building products, labour and processes into the region, he said, speaking at the Council on Tall Buildings and Urban Habitat Eighth World Congress held in Dubai.
“A survey was conducted recently that benchmarked the cost of construction of office space in the UAE against 30 or 40 other developed countries around the world,” said Davids.
“The cost was indexed to an index of 100. For the South West of London if it was 100, for a buyer in Abu Dhabi the cost index was just 60 or 70. So it was significantly cheaper to build here than compared to Britain.”
The savings come despite the construction material and methods in the Gulf – conventional and post-tensioned concrete, high-yield structural steel, pre-cast floor panels and composite construction beams and decking – meeting international standards, he said.
With more than 20 years experience in the research, design and construction of steel and concrete structures, Davids is responsible for many of the high-rise projects undertaken by Hyder Consulting in the Middle East including Emirates Towers, Burj Dubai,
Pentominium Tower, Tatweer Towers, Dubai Towers (Doha) and Al Quds Tower (Doha). These skyscrapers range from 450 metres to 700 metres or more in height and are considered to be among the tallest buildings in the world.
However, inflation in the construction industry of the region has risen to almost double the rate in the rest of the economy. In the industry, Davids said inflation has hit 19 per cent. While for the economy in general, he said: “Back in the 1990s the inflation was just two or three per cent and it was quite manageable.
From 2004 to 2006, it almost doubled and in 2007 it doubled again. We are currently looking at nine per cent inflation.“In the construction industry the rate of inflation has been rising fast and people who review tender contracts will tell you that.
The rate of inflation in the construction industry is about 1.5 to two per cent per month,” he said.The cost of imported materials has continued to play the most important role in setting prices in the industry.
“Because there is a shortage of labour at the sub-contractor level, the situation has become quite difficult,” he said, adding the efficiency of Gulf contractors and the quality of their work is on par with the best available in the rest of the world.
Asked if the boom in property prices has matched the actual increases in the cost of construction, Davids said: “When we compare the cost of buying a property in Dubai, the prices of many have almost reached world parity.
But there are many that are a lot more cheaper.”Dubai’s property investors are better off because of the capital value growth and the easy tax regime, he said.
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