The world may be facing a steel shortage, according to Lakshmi Mittal. Speaking in New York in June, the CEO of ArcelorMittal and Forbes's fourth wealthiest person in the world said: "There is short supply. All steel companies are running at full capacity."
This scarcity is problematic not only for billionaire industrialists such as Mittal (if prices continue to rise at this rate for much longer he knows the construction industry will start looking for alternatives) but also for us homebuyers, whom it has been hitting where it hurts: in the wallet. Rising steel prices, along with growing prices for other building essentials such as cement, glass and aluminium, have been stealthily pushing up prices of newbuild homes around the world - but particularly in rapidly growing areas of the world such as Dubai and Abu Dhabi.
The figures make the mind boggle. They highlight just how much more steel is now costing the building industry compared with even a year ago. According to Balli Steel, in the last 12 months alone, prices have increased by 100 per cent, from around $1,000 to $1,500 (Dh3,600 to Dh5,510) per tonne. The Middle East, while not the biggest consumer of steel in the world - that honour goes to China - is its fastest-growing consumer. In the first half of 2008, Balli supplied almost one million tonnes of steel to the region, mainly to Dubai. It predicts the new property markets in the Middle East will expand over the next five years - particularly Abu Dhabi, Qatar and Saudi Arabia - requiring yet more steel. For the next three years alone, Saudi Arabia's major projects are expected to use 500 million tonnes annually.
"I would say that since 2004 we've seen a gradual shortage in steel, and that's been driven by growth in consumption in China and emerging markets," says Nasser Alaghband, the CEO of Balli Steel. "China gets through around 500 tonnes of steel a year, whereas the UAE is around five to six million. Roughly speaking, the volume we are producing has doubled since 2001. Abu Dhabi and Dubai are pretty similar markets in terms of type of materials they use - the main difference is that Abu Dhabi has a growing steel industry of its own."
"There's been a worldwide shortage of cement, glass and steel for the past 18 months now - even the price of scrap meal has gone up," says Oliver Hickey of the Profile Group, a developer working in Dubai. "Yes, it does have a knock-on effect on house prices. The price of everything is increasing right now - land especially."
It may not only be a question of demand outstripping supply that has been fuelling house price growth in Dubai over the past few years, suggests Alex Upson of Cluttons, an agency selling property in Dubai to British buyers. "These increases in building costs may have been a contributing factor in the price rises we've been seeing in the UAE," he says.
Now, however, prices have gone up so much that developers are having to make the ultimate sacrifice and reduce their margins. "A developer likes to achieve a 30 per cent profit," says Hickey, who is selling projects on The World, Dubai Sports City and the Waterfront. "We know as a developer we can't sell at unrealistic prices, however, so the more likely outcome of this increase in construction costs is that the developer makes less money, not the consumer paying more."
Upson believes it's a recent change. "We've seen evidence of how developers have increased prices in line with the rising cost of construction," he says. "Until now, the result has been for developers to pass the increases on to the consumer. Now, developers are responding to pressure and taking lower margins. On average, prices in Dubai are slowing down. Of course, some pockets will continue to rise, such as Downtown Burj Dubai; elsewhere there is no evidence of prices dropping, but the increases are slowing down. This lack of steel, cement and other commodities is a real problem for developers and it's been very much a fact of life in Dubai for the past 12 to 18 months. In fact, building work has been prevented on a few projects because of it."
Steel accounts for around six to eight per cent of the total cost of building, says Alaghband, who points out that the price of aluminium has also gone up dramatically. This rise affects the UAE building market in particular, as developers here uses lots of aluminium in the external design of buildings, whereas other countries are more brick-based. Clearly, it's a number of factors that are driving prices up for builders, developers and, ultimately, homebuyers. Labour costs have also been rising, too.
"The price rise in commodities is not the only problem for housebuilders," says Upson. "There's also been a lot of publicity about poor living conditions for labourers. This is now being addressed, and labourers' pay is also being increased. As most of the labourers come from India and Pakistan, and the construction markets in their home counties are booming too, there is more competition for them to get work and earn money back home these days. This all means that the cost of labour has gone up. All this is now being passed on to the developer, when it would have historically been passed on to the purchaser."
So what will happen in the future? Will these increases bring building to a standstill? Hickey believes that suppliers will simply cope with the demand better in the future, and that master planners - who own land and sell plots to developers, after much due diligence to check they have the funds in place to support these rising costs - may have to start reducing their prices so building is still viable. "These commodities are not something that can run out - like natural gas - and in the future I think we'll see the relationship between supply and demand balance out," he says.
Ultimately, according to Alaghband, it all depends on the global economy. "As we look into the future, the question mark in my mind is global economic growth levels. I think if global growth remains over three per cent we will remain in a similar situation as we are now. If we dip below three per cent - and there is some concern now that this might happen - then we might even have a surplus of steel, and some of these other commodities. If I were a betting man, I'd put my money on steel prices this time next year not being significantly higher than they are now."
RESULT
RS Leipzig 3
Marcel Sabitzer 10', 21'
Emil Forsberg 87'
Tottenham 0
Other ways to buy used products in the UAE
UAE insurance firm Al Wathba National Insurance Company (AWNIC) last year launched an e-commerce website with a facility enabling users to buy car wrecks.
Bidders and potential buyers register on the online salvage car auction portal to view vehicles, review condition reports, or arrange physical surveys, and then start bidding for motors they plan to restore or harvest for parts.
Physical salvage car auctions are a common method for insurers around the world to move on heavily damaged vehicles, but AWNIC is one of the few UAE insurers to offer such services online.
For cars and less sizeable items such as bicycles and furniture, Dubizzle is arguably the best-known marketplace for pre-loved.
Founded in 2005, in recent years it has been joined by a plethora of Facebook community pages for shifting used goods, including Abu Dhabi Marketplace, Flea Market UAE and Arabian Ranches Souq Market while sites such as The Luxury Closet and Riot deal largely in second-hand fashion.
At the high-end of the pre-used spectrum, resellers such as Timepiece360.ae, WatchBox Middle East and Watches Market Dubai deal in authenticated second-hand luxury timepieces from brands such as Rolex, Hublot and Tag Heuer, with a warranty.
THE BIO
Favourite place to go to in the UAE: The desert sand dunes, just after some rain
Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude
Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE
Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally
Favourite subjects in school: Mathematics and science
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Company Profile
Company name: Big Farm Brothers
Started: September 2020
Founders: Vishal Mahajan and Navneet Kaur
Based: Dubai Investment Park 1
Industry: food and agriculture
Initial investment: $205,000
Current staff: eight to 10
Future plan: to expand to other GCC markets
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
THE BIO:
Sabri Razouk, 74
Athlete and fitness trainer
Married, father of six
Favourite exercise: Bench press
Must-eat weekly meal: Steak with beans, carrots, broccoli, crust and corn
Power drink: A glass of yoghurt
Role model: Any good man
Fight card
1. Featherweight 66kg: Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg: Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg:Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg: Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg: Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg: Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg: Yousef Al Husani (UAE) v Mohamed Allam (EGY)
8. Catchweight 73kg: Mostafa Radi (PAL) v Ahmed Abdelraouf of Egypt (EGY)
9. Featherweight 66kg: Jaures Dea (CMR) v Andre Pinheiro (BRA)
10. Catchweight 90kg: Tarek Suleiman (SYR) v Juscelino Ferreira (BRA)
Zayed Sustainability Prize
Match info
Athletic Bilbao 0
Real Madrid 1 (Ramos 73' pen)
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Bio
Age: 25
Town: Al Diqdaqah – Ras Al Khaimah
Education: Bachelors degree in mechanical engineering
Favourite colour: White
Favourite place in the UAE: Downtown Dubai
Favourite book: A Life in Administration by Ghazi Al Gosaibi.
First owned baking book: How to Be a Domestic Goddess by Nigella Lawson.
Du Football Champions
The fourth season of du Football Champions was launched at Gitex on Wednesday alongside the Middle East’s first sports-tech scouting platform.“du Talents”, which enables aspiring footballers to upload their profiles and highlights reels and communicate directly with coaches, is designed to extend the reach of the programme, which has already attracted more than 21,500 players in its first three years.
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
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Profile of MoneyFellows
Founder: Ahmed Wadi
Launched: 2016
Employees: 76
Financing stage: Series A ($4 million)
Investors: Partech, Sawari Ventures, 500 Startups, Dubai Angel Investors, Phoenician Fund
Friday’s fixture
6.15pm: Al Wahda v Hatta
6.15pm: Al Dhafra v Ajman
9pm: Al Wasl v Baniyas
9pm: Fujairah v Sharjah
.
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Hydrogen: Market potential
Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.
"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.
Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.
The cost of electrolysers used in green hydrogen production has halved over the last five years and will fall to 60 to 90 per cent by the end of the decade, acceding to Haim Israel, equity strategist at Merrill Lynch. A global focus on decarbonisation and sustainability is also a big driver in its development.
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MATCH STATS
Wolves 0
Aston Villa 1 (El Ghazi 90 4' pen)
Red cards: Joao Moutinho (Wolves); Douglas Luiz (Aston Villa)
Man of the match: Emi Martinez (Aston Villa)
