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UAE construction costs to fall says report

The construction costs in the UAE will fall by about 1.3 per cent in 2012 due to the unexpected slowdown in the country’s projects market last year, according to a new report.

‘The drop is the result of a fall in demand for construction materials due to a contraction in the UAE project market, which witnessed a 52 per cent slump in the value of contracts awarded in 2011 compared to 2010,’ said the report by construction industry cost tracker Meed Cost Indices (MCI).

MCI has however predicted that prices will bounce back in 2013 once the projects originally planned for 2011 get re-launched this year and confidence returns to the global economy and finance for projects becomes more readily available.

The report was published at the launch of MCI, the UAE’s first independent tracker of construction costs.

MCI provides an independent construction cost analysis and forecasting tool based on historical costs and forward-looking market projections, said a senior official.

‘The index provides companies involved in the construction and development of projects in the UAE with a five-year forecast of costs, enabling them to mitigate the risks of price volatility, remarked MCI general manager Emil Rademeyer.

Commenting on the MCI launch, Rob Edgecombe, director of Rider LevettBucknall, a leading international cost consultancy, said the industry had been in need of an independent cost index for a number of years.

“The MCI data shows that construction costs in the UAE have fallen to similar levels to those seen in 2006, but will start to climb again next year,” remarked Meed editor Richard Thompson.

“So, the message to potential investors and developers of UAE projects is that 2012 is a good year to start building again,” he added

“Apicorp’s robust capitalization and strong liquidity profile is backed by strong and conservative banking fundamentals,” Al Nuaimi added.


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