Not everybody wins during this period of the business cycle

by|Oct 1, 2018|Real Estate|0 comments

Not everybody wins during this period of the business cycle

 In 2018, we are experiencing increasing costs for materials, shortage of labour, increased wages and unprecedented land prices. The real estate market is booming, and contractors are busier than ever. However, does this also mean everybody is prospering?

Landlords and homeowners are struggling to find contractors to quote for work while watching prices increase by the day. General contractors have difficulty finding labour to meet the high demand, while simultaneously fighting cost increases their sub-contractors lie upon them.

A 7.5% increase in construction costs this year shows that after a long crisis we are now in a period where contractors have the luxury of cherry-picking new work and demanding higher prices. Builders can select projects with the lowest risk and the highest reward, leaving a number of projects untouched. However, general contractors and landlords are experiencing higher risks during this period of the business cycle, due to increased wages and the difficulty to tender projects. It is increasingly complex to put a price on a project nowadays.

“We have entered an era where clients are happy to receive just 1 quote. This is an undesirable trend to landlords and general contractors and should be avoided where possible.”

Knowledge Centre DBD predicts the final costs peaks to arrive in 2019/2020 and warns companies that an increasing number of tenders will fail if not dealt with correctly.