The prices of building materials are expected to rise by about five per cent during the third quarter of 2008 in the Gulf region, according to latest figures.
Record oil prices, rising freight overheads and the strong demand witnessed in the region are the major causes of the steep increase in prices, Danube Building Materials FZCO, a company in the construction, interior decoration and shop-fitting industry claimed.
The price increase follows a rise in prices earlier this year triggered by higher freight charges due to local fuel hike, restrictions on log cutting by countries like Malaysia, Indonesia and Burma, appreciation in the Euro and increased local demand. Danube predicts prices to continue rising until a drop in oil prices or the increased availability of freight shipments.
One of the construction products with the highest price increase was steel, which has doubled since January when it was at $700 per ton, reaching $1,500 per ton in July.
Costs of wood products such as timber and film-faced plywood have also gone up by at least 25 per cent during the past three months while whitewood prices have jumped by 20 per cent.
Aluminum prices have also increased by almost 23 per cent in the first quarter of 2008 compared to the average price in 2007.
“The inflation follows the increase experienced earlier this year when prices rose between 10 to 15 per cent. Continuous growth in the prices of core building materials will have huge financial implications on the local construction industry. We anticipate that the real estate and construction industry will feel a significant impact of the rocketing oil prices and the rising freight costs in the coming months, considering the massive projects that are being launched,” said Rizwan Sajan, chairman, Danube.
The steep increase in the price of steel is a source of major concern for Danube, with the company having announced its foray into steel production with an investment of 200 million dirhams.
In addition, plans to invest 50 million dirhams into the manufacturing of aluminum and glass products is also in place, which is expected to curb the rising costs of these materials in the region.
Danube began its operations in Jebel Ali in 2004 with a 19,000-square metre warehouse cum office, which serves as its regional hub and caters to booming markets in UAE, Oman, Bahrain and India.
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