Inflationary pressures in the GCC have increased the cost of building materials and forced skilled and unskilled workers to leave the region thus resulting in a labour shortage, said a real estate expert.

This inturn has fuelled soaring building costs in the region, pointed out Salwa Malhas, executive vice-president of Al Mazaya Holdings.

"The costs of building in the Gulf region increased at an estimated rate of at 30 per cent last year alone, and a further 50 per cent in the first half of this year," she noted.

The regional real estate developer said that contractors were trying hard to offset rising building material prices fuelled by local and global forces and record oil prices.

The labour shortage, according to Malhas, is caused by the deportation of hundreds of thousands of illegal Asian workers in a bid to solve the demographic imbalance and to put an end to continuous strikes by labourers who are unable to cope with the rising cost of living.

"Building material prices have increased by 50 per cent on average, and even more in the case of certain materials," said Malhas.

"We are working out timetables to avoid delays in the delivery of our projects and also examining plans to offset the effects of rising building material prices and the labour shortage, adopting such approaches as the launch of projects for middle income groups in certain regions," she noted.

"We are also implementing strategies for horizontal expansion, such as the establishment of Mazaya Qatar and Mazaya KSA, as well as investing heavily in Oman, Bahrain and other countries."

"Delays in project delivery is not caused by a lack of reliable contractors, but by the inability of those contractors to find skilled labourers and by the rising cost of building materials," she said.

"Changes in steel and cement prices mean that there delays in project delivery are inevitable.

"Several contractors are seeking alliances with real estate developers in an attempt to work together to control construction costs. These partnerships are becoming more commonplace year-on-year, in parallel with the growth of the industry.

"This method may alleviate the pressure placed on contractors somewhat, as they are apparently unable to bear the burden of rising costs alone," she said.-TradeArabia News Service