As building costs pile up, will property buyers in UAE have to start paying more?

As building costs pile up, will property buyers in UAE have to start paying more?

For property buyers – especially end-users – any further addition to the property price can be quite a burden. Already, they have to factor in higher mortgage rates (after 11 rate hikes brought on by the US Federal Reserve) and then there is already the run up property values in Dubai since 2021, which has seen projects in some locations asking for even 25-35 per cent more than what they would have in 2020.

Developer sources say that adding the higher project costs will only be done at a last resort. “Right now, we are OK because we had placed bulk orders for steel and other building materials well before prices started to firm up from June,” said one developer. “That means, we have not placed a mark-up on or selling price – so far.”

It was all looking good for UAE developers and construction firms at the start of 2023. Building material prices had dropped considerably from mid-2022 onwards. On some commodities, that change came about even earlier.

So, even as higher inflation became a source of discomfort for businesses across sectors, it wasn’t that much of an issue for developers, at least on the project side of things.

Then, June happened. Steel,