Falling Construction Costs in Dubai

There hasn’t been much good news recently in the property sector in Dubai or indeed anywhere across the globe. Experts suggest, however, that the cost of construction in Dubai has now fallen by up to 60% in the last few months.

The cost of construction in Dubai peaked in 2008 but has now reportedly fallen to as low as 170 Dhs/Sq.Ft while ‘shell and core costs’ of commercial building have fallen to between 200 – 260 AED/Sq.Ft.

While this won’t be good news for everybody involved in the property sector, it might aid to stimulate the market which seemed unstoppable only months back, but which has been heavily affected by the recession just as property markets worldwide.

The falling construction costs mean that developers could potentially reduce prices for off-plan property in Dubai but face complaints from clients who purchased in the same developments at the peak of prices in 2008.

Some developers are revising prices even to existing customers, and most will negotiate both prices and payment plans although they feel forced to advertise listed prices of 2008.

The Dubai RERA (Real Estate Regulatory Authority) is also in process of introducing new laws to further regulate the property market and to better protect both developers and investors.

However, to really kick-start the market the authorities need to ensure an adequate supply of finance and mortgages and they need to reduce interest rates. This is precisely what the authorities are currently working on, and once this financing is in place the Dubai property market will surely stage a dramatic recovery.

Falling Construction Costs in Dubai