A number of construction companies have put their recruitment plans on hold as their hopes of bagging new projects face a hurdle in the wake of a slowdown in the building industry which has set in following the global financial turmoil.
Many new projects have been deferred due to the meltdown and this, obviously, is leaving an adverse impact on the overall business environment, a leading industrialist, Abdul Hadi Al Shahwani, told The Peninsula yesterday.
One of the most undesirable consequences of the meltdown has been that some building and contracting companies have begun reporting difficulties in getting payments.
“It cannot be denied that some companies are witnessing delays in receiving payments,” said Mohamed Sabih Bukhari, head of a construction major, SATCO.
Bukhari also disclosed that his own company had put on hold plans to bring over an additional 500-strong workforce from overseas to manage various new projects that it was supposed to get.
“But now that the projects are either shelved or suspended, there is, obviously, no point in hiring the workers,” he added.
As supplies have begun exceeding demand, the prices, particularly of building materials, are coming down. This means that contractors have to re-work quotations even for some ongoing projects.
The prices of land and housing stock have also come down by no less than 30 percent since the slowdown began, said Al Shahwani.
But Bukhari said that despite the difficulties being faced by the building industry, no company has so far retrenched staff. “We haven’t heard of any lay-offs.”
Al Shahwani said that a silver lining of the slowdown has, however, been that the rate of inflation is declining, much to the relief of the common man. “In my own estimation, inflation is down by around 30 to 50 per cent,” he said.
Imported goods have become cheaper but the declining inflation is yet to force the spiraling rents down, said the industrialist. “I think we will have to wait a little bit more to see the impact of falling prices on house rent. The house rents will eventually recede.”
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