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Mazaya Monthly Real Estate Report -
Week 1 - May 2016
UAE
Al Mazaya’s Report points to the
difference in costs of building materials
in the UAE market – with fluctuations
noted from emirate to emirate. Also
notable are the differences with regard
to the cost of labour, office rentals and
land prices, differing levels of quality
in building, and other relevant factors
related to competition and inflation rates.
It is a fact that building costs in Abu
Dhabi are higher than in the other six
emirates due to the higher costs of
rentals, manpower, land prices and
accompanying costs for applying
quality, sustainability and safety
standards. All of these factors have led
to an increase in aggregate building
costs, in the UAE capital and the wider
emirate. In addition, the UAE real estate
market is among those that need stable
building material prices to enable the
contractors to determine costs. This
is because ongoing cost fluctuations
motivate the contractors to be patient
when entering into new projects or
hedge their inclinations towards higher
cost estimates, which eventually leads
to an increase in overall building costs.
Al Mazaya’s Report adds that the
decrease in prices of buildingmaterials,
along with the decline in oil prices, will
activate the UAE real estate market
across all categories, and in particular
the middle-income group. This will be
achieved by immediately constructing
housing units at these competitive
prices, with forecasts suggesting
that the current recession in the
prices will not last. At the forefront
of this recession is the current cost
of energy, which constitutes a large
part of the overall production cost.
Information issued by the Statistics Centre
Abu Dhabi (SCAD) has revealed that the
average pricing of building materials
saw a rise in Q4 2015, increasing by 16
per cent over the corresponding period,
in 2014; however, steel prices marked a
decrease by up to 23.5 per cent. The cost
of diesel also saw a marked reduction
of 20.7 per cent, over the same period.
In Dubai, within the same timeframe,
prices of building materials dropped,
with steel seeing a decline between
23.7 and 19.9 per cent, while cement
dropped by a rate of up to 2.4 per cent.