Dubai: Prices of building materials have climbed 10 to 30 per cent over the past two months, with strong indications of a further rise in the coming months, due to a combination of local and international factors.
Building materials suppliers in Dubai say the unprecedented rise was caused by factors like higher freight charges triggered by increased fuel prices, restrictions on log cutting imposed by countries like Malaysia, Indonesia and Burma, 10 per cent appreciation in the euro and increased local demand due to frenetic construction activity.
According to Rizwan Sajan, Chairman of Dubai-based Danube Building Materials FZCO, over the past two months prices of commercial plywood rose from $315 per cubic metre to $410 cubic metre.
Red Meranti, another key building material, climbed from $450 to $550 per tonne, while MDF rose from $215 per cubic metre to $240 per cubic metre.
"This has caused a severe crunch on the construction industry," said Rizwan.
"To make matters worse, restrictions on log cutting by some countries could lead to an acute shortage in supply in the coming months. Contractors are reacting by securing their supplies, in anticipation of adverse developments."
Rizwan, whose company is one of the major suppliers of building materials to the construction industry in the region, says the present scenario calls for a cautious approach by contractors.
"One solution is to ensure that contractors incorporate a clause wherein they protect themselves against unprecedented price increases," advises Rizwan. "This applies very strongly to the UAE where a large number of gigantic construction projects are underway, and dramatic price spirals in building materials could upset the equation badly."
