x Abu Dhabi, UAEThursday 27 July 2017

Optimism builds on construction salaries in Gulf

Construction professionals hit by the downturn in the building industry may be encouraged by the forecast that salaries in Saudi Arabia and Qatar are expected to rise.

Construction professionals hit by the downturn in the building industry may be encouraged by the forecast that salaries in Saudi Arabia and Qatar are expected to rise. The cost of hiring staff for construction projects is expected to rise 15 per cent between June this year and the end of next year, according to figures from EC Harris, the UK construction consultancy. A number of UAE firms have ventured into Qatar and Saudi Arabia, the strongest construction markets in the GCC, to capitalise on a pipeline of big projects mainly backed by government cash.

But with limited availability of skilled labour in both countries to meet project demands, companies will have to pay higher salaries to attract staff. "It is anticipated that demand and workload will increase towards the back end of 2010, with inflation, overheads and labour costs increasing in line with this," said Simon Light, a partner at EC Harris. "In addition, due to only a small number of contractors being established and eligible to operate in Qatar and Saudi Arabia, overhead and profit margins are also expected to rise between 1.5 and 2.5 per cent higher than the UAE as workload increases."

Salary levels for expatriates working in property and construction fell by about 30 per cent across the GCC between September 2008 and the end of last year, according to data from APG Global, a recruitment agency based in Australia. The average monthly salary for a project manager in Saudi Arabia or Qatar is now about Dh40,000 (US$10,890) compared with Dh55,000 at the peak in September 2008. In Dubai, salary rates among western expatriates soared between 2006 and 2008 as companies paid above-market rates or offered twice-yearly raises to keep staff in the construction boom.

"You're not going to see the kind of salaries you saw in Dubai two or three years ago ? levels are more realistic now," said Gregor Black, a managing partner at Dunedin Recruitment in Dubai. "But as construction in Dubai remains depressed, there's still a lot of people who have to work and will move to Qatar or Saudi Arabia. It's not an option right now to return home to places like the UK." Al Shafar General Contracting is looking for projects in Saudi Arabia, where strong population growth has fuelled demand for new homes and the government is heavily investing in infrastructure projects.

"Salary levels are similar to the UAE and living costs are cheaper, but you need to compensate people for being in Saudi," said Bishoy Azmy, the chief executive of Al Shafar. Mr Light added that overall construction costs in Saudi Arabia will reach a "sustainable" pace by the end of next year, while costs in Qatar could reach levels last seen in 2007, when prices surged by 50 per cent because of a reliance on imported building materials.

agiuffrida@thenational.ae