Construction

UAE Tender Prices to Remain Flat in 2012

Follows 3% price fall Q4 2011, says EC Harris

Tender prices for construction work in the UAE are to remain “flat” according to built asset consultancy EC Harris and its Tender Price Index report.

A report by the company predicted the tender prices should pick up “over the next couple of years”

The results follow a 3% fall in tender prices by the end of 2011

The quarterly EC Harris Tender Price Index measures changes in contractor input costs such as labour, materials and plant items.  Over the 12 months up to December 2011 the price of nearly all commodities decreased, with the exception of crude oil, cement, reinforced bars and steel beams.  Rubber, tin and nickel showed the most movement during the year, decreasing in price by 32%, 26% and 25% respectively.

“Commodity prices have shown huge volatility over the past year, reflecting an uncertain recovery in world markets,” said the company’s head of costs and commercial, Nick Smith.

“I don’t think we will see an improvement this year, but tender prices should pick up over the next couple of years as a number of large projects across the Gulf region are given the go ahead and put out to tender,” Smith added.

In addition, the Index concludes consumer price inflation, material prices and construction labour rates will all be flat throughout 2012, rising in 2013; the soonest likely time for new projects to be tendered in the UAE.

In a statement, the firm warned contractors in the UAE that they face “a tough 12 months and will have to absorb any increases in labour, plant or materials which will impact margins”.

EC Harris forecasts that tender prices in 2013 are likely to rise by up to 4% during, followed by a steady growth of around 5% in 2014 and 2015, spurred by confidence and liquidity.

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