UAE construction costs to soar

[hiszein]

UAE construction costs to soar
United Arab Emirates: Sunday, December 09 - 2007 at 15:35
The cost of construction in the UAE could jump substantially next year according to the UK based consultancy EC Harris, reported Reuters citing Emirates Business 24/7. Key raw materials such as cement and steel could rise by up to 19%, while labour costs are also expected to rise significantly. Construction costs spiked by 25% in 2006, while the prices of materials have climbed by well over 15% this year

[DoBuy]

Originally Posted by hiszein

UAE construction costs to soar
United Arab Emirates: Sunday, December 09 - 2007 at 15:35
The cost of construction in the UAE could jump substantially next year according to the UK based consultancy EC Harris, reported Reuters citing Emirates Business 24/7. Key raw materials such as cement and steel could rise by up to 19%, while labour costs are also expected to rise significantly. Construction costs spiked by 25% in 2006, while the prices of materials have climbed by well over 15% this year

I assume if its going to cost more to build,this will push up the prices of new launches which would then make existing properties more expensive?

[hiszein]

I publised this news so any1 wants to buy a property in Dubai can make a fast movment as prices will be increasing

Originally Posted by DoBuy

I assume if its going to cost more to build,this will push up the prices of new launches which would then make existing properties more expensive?

[DAYFox]

Originally Posted by hiszein

I publised this news so any1 wants to buy a property in Dubai can make a fast movment as prices will be increasing

Ok, let me ask one thing:

Construction cost will rise, thats for sure and therfore upcoming launches will be more expensive than today. In the same time existing properties will increase in value, BUT how do developers react on that dramtic increase in construction costs? For instance Developer X sold in Jan 2006 a Property in Business Bay for 1200AED per sqfeet and based his calculations on construction costs in 2006. How can these developers finish the tower???

[DoBuy]

Originally Posted by DAYFox

Ok, let me ask one thing:

Construction cost will rise, thats for sure and therfore upcoming launches will be more expensive than today. In the same time existing properties will increase in value, BUT how do developers react on that dramtic increase in construction costs? For instance Developer X sold in Jan 2006 a Property in Business Bay for 1200AED per sqfeet and based his calculations on construction costs in 2006. How can these developers finish the tower???

I would think their original profit margins worked out were enough to absorb an increase

[mpat]

can not absorb that much rise,Their quality will deteriorate.Government and buyers should ensure that developers give a minimum acceptable international standards of quality.I have seen almost 10 new apartments ready to move in and the quality is very bad.Does anyone know of a law in this regards?

[centurygrove]

the actual cost of increase in construction has increased by 30% this year. about developers absorbing increasing costs you may find that these developers will probably hand back deposits to buyers which has happened many times in the past.

[DoBuy]

Originally Posted by centurygrove

the actual cost of increase in construction has increased by 30% this year. about developers absorbing increasing costs you may find that these developers will probably hand back deposits to buyers which has happened many times in the past.

So if they hand back deposits will they not bother to build or just re-launch?Also,with labour costs no more then 250 dollars a month,if these guys are charging around 400.000 for a studio are u sure they cant absorb these increases?

[centurygrove]

it is happened several times that deposits are handed back and projects later relaunched at a higher price. Dubai Pearl is just an example of this, however with this project construction had started. Therefore some developers could use investors money interest free for a period and then return just the deposits. As an investor if you have paid £50000 and a year later the project is withdrawn, all you want is your money back. In some instances developers have offered only to pay a percentage back or have taken their time in paying back, however Escrow accounts should counter this problem. I am sure labour rates have increased vastly due to 400000 labourers being sent back to their countries in an amnesty period in August (those whose work visas had expired), these workers will come back under new visas but this will obviously take time.

[DAYFox]

Originally Posted by centurygrove

it is happened several times that deposits are handed back and projects later relaunched at a higher price. Dubai Pearl is just an example of this, however with this project construction had started. Therefore some developers could use investors money interest free for a period and then return just the deposits. As an investor if you have paid £50000 and a year later the project is withdrawn, all you want is your money back. In some instances developers have offered only to pay a percentage back or have taken their time in paying back, however Escrow accounts should counter this problem. I am sure labour rates have increased vastly due to 400000 labourers being sent back to their countries in an amnesty period in August (those whose work visas had expired), these workers will come back under new visas but this will obviously take time.

What about projects where Groundwork is already completed, the actual Tower starts rising and more than 50% of the amount is already paid. Do you think a scenario like you explained is possible there as well?