27 April 2005

The Web

Construction industry review reveals staggering increase in property prices

Matthew Vella

The Building Industry Consultative Council yesterday published its first ever ‘State of the Construction Industry report, revealing a rabid increase in property prices and remarkable discrepancies in construction prices.
According to the report, the “continued trend of increasing property prices” in 2003 had saw a staggering increase of 75 per cent in the price of semi-detached dwellings over that of 2002.
During 2003, the prices for semi-detached bungalows and detached villas increased by over 70 per cent, the highest increase noted for three and four-bedroomed dwellings.
A semidetached property costing Lm200,000 in 2002 shot up to close to Lm400,000 in 2003, after a relatively stable period between 1999 and 2002.
Other properties maintained a stable pricing throughout the same five-year period. During 2003, the largest increase over 2002 prices for maisonettes and terraced houses was over 30 per cent. The BICC believes this can be indicative of an increase in demand for smaller properties and a possible shortage in their supply.
Flats registered the lowest increase at five per cent. Between 1999 and 2003 the price for single bedroom flats remained at the same figures of 2002 whilst the prices for two-bedroomed flats rose by ten per cent. Prices for three-bedroomed flats fell by two per cent.
Architects and civil engineers at yesterday’s launch of the BICC noted how the report had made little provision for the perceptions of the general public on the construction and quarrying industry. Despite offering a comprehensive review of the construction industry, architects noted that there was little done about the impact of the construction industry on the environment and the quality of life of dwellers living next to construction sites.
The report noted different forms of criticism for the Malta Environment and Planning Authority by contractors. They said that the MEPA board should not be allowed to listen in to the directorate meetings since this created an unfair hearing. Applications should not take more than three months to be processed. In other cases, the interviewees noted, MEPA was seen as using two weights and two measures in its approach to planning applications. It was also noted that the application of draft local plans was not consisten.
According to the report, it is believed 42 per cent of the industry’s contractors are generating turnover figures of more than Lm1 million, whilst another significant chunk (29 per cent) only totals a maximum of Lm10,000 a year. Respondents noted how business had remained the same in the last year, with profits possibly envisaged to be embarking on a downward trend.
According to the report the industry has contributed over Lm40 million a year to the gross domestic product over the period 2001-2003.
The BICC report drew revealing comparisons on the increase costs of the construction industry, with a breakdown of the maximum and minimum prices for construction services on the market.
These included wide fluctuations such as that for the digging of foundations, the lowest price being Lm2.00 per cubic metre and the highest Lm15.00. Concrete beams ranged as high as Lm353 to a low of Lm134 per cubic metre, whilst columns cost as high as LM263 and as low as Lm90 per cubic metre.
The report also noted that the construction industry was likely to be experiencing a shortage in managerial positions and civil engineering technicians. However, a surplus appears to exist in administrative and support staff, storekeepers, carpenters, and an array of manual workers such as plasterers, tile layers, plumbers, welders and cleaners.
A sectorial analysis of the various construction sectors showed that the average wage in the mining and quarrying sector was Lm5,400, much higher than the national average of Lm5,032 and again higher than that of the construction sector at Lm4,399.
The BICC report surmised that the low salaries in construction were tantamount to semi-skilled and unskilled workforce which was dragging down the sector’s average.
The report however said that contractors felt that there was little training provision available, particularly for basic skills. They stated that although they felt that the school for tradesmen in stonework was doing a good job, it did not satisfy the needs of contractors within the construction industry. The current trend was to train employees on the job.
The majority of construction firms, 64 per cent, employ over 20 people in their activity, whilst at least 24 per cent of those interviewed employed over 100 workers.


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