Tender prices ‘to stay flat’ in UAE, Muscat
Markets are among just three globally where tender prices will not increase this year, according to Turner & Townsend
The UAE and Muscat are among just three global locations where construction tender prices are expected to remain flat in 2016, according to a new report.
Construction costs will also see no change in the two Arabian Gulf markets this year, Turner & Townsend said in its International Construction Market Survey 2016.
The indicators suggest “lukewarm” activity in the UAE and Muscat, amid growth – albeit at a slower rate – in global average tender prices, the project management consultancy said.
“Global expectations for tender price increases have eased down from an average of 4.3 percent in 2015 to only 3.4 percent in 2016,” the Turner & Townsend report said.
“More than half of the markets surveyed expect tender prices to rise by less than three percent, while in three locations – Beijing, Muscat and the UAE – tender prices are expected to remain flat over the year.”
Global construction costs are also expected to rise by an average of 3.4%, the report found.
“Construction costs have increased over the last 12 months… On average, they are set to rise slightly in the next 12 months, increasing to 3.4 percent from 2.9 percent for the year to January 2016.”
But the “cooling” markets of the UAE and Muscat will see zero change in construction costs this year, the report added.
The falling price of oil has “had a significant negative effect” in the UAE, although Dubai stands out from the market as a whole, the report said.
“Dubai defies the projects downturn occurring across the rest of the country as several major projects press ahead. Construction costs have remained stable in the past 12 months and this is expected to continue,” it noted.
“Expected low cash availability is driving concerns that the coming two years will be challenging for the UAE economy… Despite this, plans remain in place for a number of ambitious construction projects, including the world’s tallest twin towers, an underwater hotel and a rainforest in the desert.”
This year will mark “a year of austerity” in the Muscat construction market, the report added. “The next two years will be challenging given the forecasts of low cash fluidity,” it said. “Although the government appears disposed to maintain spending wherever possible, particularly with its investment in the non-hydrocarbon sector and large infrastructure projects.”
In Doha, the construction market is expected to remain “volatile”, although costs will edge up 2.7% in 2015–2016 and 1.5% in 2016–2017, the report noted.
“Qatar is still investing significantly in infrastructure construction, but with authorities squeezing budgets there has been a reduction in tenders from the government infrastructure sector,” the report said.
“The property sector has slowed in the last six months, partially due to public sector cuts and reduced investment. Private sector developers are still issuing tenders, although this trend is dependent on interest rates remaining low and developer confidence stabilising.”
The Swiss city of Zurich was found to be the world’s most expensive construction market, with typical costs reaching $3,683 per square metre, the Turner & Townsend report said. Beijing saw the biggest fall in construction costs in 2015, with a 10% decline.
