Materials prices in the United Arab Emirates have risen almost 20% in the past year, according to a report by EC Harris.
The consultant said rising prices were “still a problem” although construction inflation had slowed down since last year.
Rises include a 45% hike for steel beams and a 33% increase for cement. Dubai followed Saudi Arabia’s lead and capped cement prices in July.
But EC Harris said demand for construction services remained high and was increasing margins. It said: “It is evident that contractors and their supply chains remain focused on delivering for clients on major projects.
“Demand in the UAE is resulting in increases in contractors’ margins, approaching 15%.”
Labour price increases have slowed and are just 2% higher than a year ago. There was a big increase in the cost of M&E labour, however, with plumbers and electricians earning about 7.5% more than 12 months ago.
The firm added that the UAE utilities market had overheated owing to high demand, which is risky for large projects.