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Construction looks set to pick up.

Byline: Cheaper materials and cut-throat competition mean industry could revive this year.

Dubai: A softening in prices of building materials is expected to kick the construction industry back into action this year, after a first quarter marked by project delays, industry experts say.

Riad Bsaibes, Chief Operating Officer at Amana Steel Buildings Contracting Company, said his firm currently pays Dh18 for 50-kg bags of cement (Dh360 per tonne) and Dh1,850 per tonne of unquoted steel rebar.

Data shows that steel rebar was priced at Dh6,500 per tonne in July 2008 before falling to Dh3,000 per tonne by the end of the year.

Now that steel rebar is around Dh1,850 per tonne, it is back to 2003 levels.

Bsaibes said construction costs have dropped and will now start stabilising because of the inventory in the system.

A lot of contractors have projects that have been delayed and so they will become more cut-throat to get work, even if it means cutting costs, Bsaibes said.

"Now prices are hitting bottom because we're beginning to see the inventory in the system and we're eating through that inventory," Bsaibes told Gulf News.

Danube Building Materials is currently selling steel at Dh1,850 per tonne, according to Venkatesan Sethuraman, business head of steel at Danube. He said the five per cent customs duty has affected steel prices. "Also, the basic price of steel is going up so we have a double problem. Turkish suppliers put the prices up $30 [Dh110.10] to $40 over the last ten days so we presume prices will go up in the local market in the next few weeks," Sethuraman said.

The government recently re-instated the five per cent customs duty on cement and steel after removing it last March in an effort to support the massive boom in construction, facilitate supply and keep prices low.

Should property prices be decreased in line with the reducing costs of building materials? Have you noticed a decrease in real estate prices?

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Publication:Gulf News (United Arab Emirates)
Date:Apr 4, 2009
Words:349
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