Building materials prices rise can affect Dubai real estate prices

29.01.2017

Danube Group chief believes this is a case for the UAE and the rest of the GCC countries.

The cost of building materials has been rising since late last year across the whole Middle East region. If not stabilized in the coming months, the situation can lead to the real estate prices rise in the UAE, said Rizwan Sajan, founder and chairman of Danube Group. He advises potential buyers to fast-track their buying decision and, at least, to protect their savings with down payments for off-plan properties before developers begin re-pricing upwards to adjust.

Prices for steel, the main building material in the "future city" of Dubai increased by 20 per cent at the end of 2016, as compared with its beginning, sanitary ware increased in price by 10-15 per cent, while prices for plywood increased by 5 per cent. Building materials producers serving the GCC markets expect further abrupt rise in prices for their products.

“The escalation of certain building materials prices will push the construction cost upwards, that might have a knock-on effect on the property prices going forward,” said Sajan.

On the other hand, the rise in building materials prices indicates that the UAE’s real estate sector is expanding even at a faster pace than expected. At the same time, private developers’ number is increasing in the Dubai market. Last year, private companies delivered twice more property units than public developers: 14,532 units against 8,936, respectively. And mortgage proportion in the overall volume of real estate transactions registered is also rising: 55 per cent of property deals in in 2016 in Dubai were conducted using credit funds. Thus, Dubai home buyers now have got wider opportunities and more choices to make a right purchase on time, without waiting for further price increases.

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