Rise in raw material costs hits sector

The price of materials such as steel, pictured, have increased significantly over the past year. (Getty Images)

The cost of raw materials is one of the major challenges for the real estate industry in the region today, Emaar’s regional managing director said on Tuesday at Cityscape.

Speaking at a presentation during the three-day Dubai event, Nader Mohammed said that the rise in cost of raw materials and the shortage of a skilled work force were two of the major obstacles to the development of the real estate industry in the region.

Demand for building raw materials, such as steel and wood, has soared in the past few years, rising as much as 30% over the past year in some parts of the region.

In a bid to boost business, some governments have begun to consider offering incentives to attract investors, Mohammed said.

Advising real estate developers to diversify risk by focusing on different geographic markets, he stressed the importance of taking a long-term approach to development instead of focusing on short-term gains.

“Innovation is the watchword for the real estate industry today. We need to focus on the long-term and be able to add value rather than be a quick profit seeker,” he said.

Mohammed also emphasized the importance for developers of working more closely with other partners, including with the government.

Cityscape takes place 16-18 October, at Dubai International Exhibition Centre.

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