Gulf News

Under-quoting hits constructi­on sector

Sudden spike in material and shipment costs pose a challenge

- DUBAI BY MANOJ NAIR Business Editor

TDue to the current macro-economic environmen­t and the pandemic, clients/owners/ developers are launching limited active tenders and projects.”

Yu Tao | President and CEO at CSCEC

he sudden increase in material and shipment costs since end-2000 remain the biggest challenge for the UAE constructi­on sector, according to the head of Middle East operations at China’s biggest contractor.

Constructi­on material costs, depending on the category, have risen by 10-30 per cent in these four or five months, adding to the worries of contractor­s and developers alike.

According to Yu Tao, president and CEO at China State Constructi­on Engineerin­g Corp (CSCEC), Middle East, to secure a project, some contractor­s are tendering even with the price lower than their costs.

This need to secure work at any cost — even if means taking a loss if the project faces time and cost overruns — comes even as new constructi­on work has dropped.

Signs of bounce back

“Due to the current macroecono­mic environmen­t and the pandemic, clients/owners/developers are launching limited active tenders and projects,” said Tao.

Government-created project activity has picked up since the second-half of last year, related to industrial, utilities, oil and gas, renewable energy and even manufactur­ing. Many of these would have been planned earlier but actually getting launched now.

Real estate developmen­t continues to lag in terms of new project awards. Tao hopes this situation gets rectified in the coming weeks.

“UAE real estate has shown strong signs of bouncing back from the pandemic impact,” he said. “Hopefully, in the near future, it will attract more local and foreign investment and demand, leading to the recovery for constructi­on,” he said.

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