UAE construction costs may rise

Colliers International study predicts a slower rise of less than 1.89% in the next 12 months

Construction costs in the UAE rose between 1.8 per cent and 2.3 per cent between the first quarter of 2017 and the first quarter of this year, according to a study by Colliers International.

During the same period material costs increased by 3.1 per cent.

“The industry has witnessed a notable upward movement in construction materials,” Colliers’ note in their May update, released yesterday.

“There are many factors for this ascending trend, which include increased cost of production for locally manufactured materials, a recent drive by Chinese authorities to close down factories that do not conform to pollution control regulations, increased cost of materials imported from regions experiencing a growth in construction such as Europe, and world pricing for the likes of steel.”

World Bank prediction

However, Colliers predicts price inflation for overall construction costs will fall in 2018 to below 1.8 per cent, noting that the World Bank predicts no price rises for copper and crude oil, a 6.3 per cent fall in the price of iron ore, and a 3.4 per cent fall in the price of aluminium.

Overall, Colliers estimates the current cost of constructing a medium-specification villa in Abu Dhabi and Dubai at between Dh3,490 and Dh4,277 a square metre, with high-specification villas costing between Dh5,377 and Dh6,390 a square metre.

Medium-specification residential apartments in low- to medium-rise buildings cost between Dh3,275 and Dh4,288 a square metre, while high-specification apartments in high rises cost between Dh5,688 and Dh6,440.

Commercial properties produced as shell and core are a little cheaper to build, but fivestar hotels, with fixtures and fittings, cost up to Dh11,977 a square metre.