• HSBC

GCC Common Market to increase labour costs

  • United Arab Emirates: Wednesday, January 23 - 2008 at 16:17

The GCC Common Market is expected to push up labour prices in the short term, increasing property construction costs. However, longer term, it is likely to have a similar affect to in the European Union, where cheaper workers have flooded into some countries, such as the UK, in the expectation of earning more money than they can in their homeland. This has driven down the prices charged by incumbent workers, because the migrants will work for less.

Speaking at a pre-briefing for the MEED Arabian World Construction summit, which takes place in Abu Dhabi in February, Denis O'Connor, General Manager at ADCP (Abu Dhabi Commercial Properties), said: 'It will increase the labour costs, which we will have to absorb.' He made it clear though that companies could not continually absorb the costs.

ADCP, a wholly owned subsidiary of Abu Dhabi Commercial Bank, manages 3,400 buildings in the emirate, with 260 construction projects planned, 80 of which have broken ground.

Victor Orth, CEO and Managing Director at Al Qudra Real Estate, said that the GCC was likely to follow the EU with labour costs, and that the Common Market would also help make financial transactions easier. 'We have to create mini holding companies at the moment to get around being an outside company. But this doesn't help have more efficient, cost-effective flow of funds.'
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