Tag: labour costs

ACR: Construction Costs Rise by 10.3% in 2018

28 November 2018 – Eje Prime

Construction, at the price of gold. The costs relating to residential construction increased by 10.3% in 2018, according to the second edition of the Direct Construction Costs Index published by the ACR group.

In this way, the upward trend that started in 2015 is continuing, mainly due to the exponential rise in the cost of labour and the slight upturn in the price of materials. The data provided by the property developer reflects significant growth in the most representative items of buildings such as, for example, the façades, internal divisions and structure.

For Michel Elizalde, CEO of the ACR Group, “the sector must react to this reality and look for solutions that help to alleviate the effects of such a volatile scenario”. According to the executive, the solution involves “finding more collaborative contractual formulae with clients; seeking more stable relationship frameworks; embarking on training so that professionals are prepared; and taking determined steps towards the industrialisation of components and processes”.

Original story: Eje Prime 

Translation: Carmel Drake

ACR: Residential Construction Costs Rose by 12.1% YoY in 2017

25 January 2018 – Cinco Días

The rate of inflation in the house building sector is causing concern. That has been reflected in recent months not only by the trade association but also by companies in the sector and other entities such as Sociedad de Tasación. On Thursday, some of the first data evidencing this phenomenon was published. Over the last year, to December 2017, the cost of residential construction rose by 12.1%. That is reflected in the recently created Index of Direct Construction Costs, prepared by the Navarran construction group ACR.

The index also shows that the increase has amounted to 17.5% over the last two years. The figure indicates that in 2017, these costs grew dramatically and that they accelerated. “Costs mainly grow for two reasons, a shortage of labour and a lack of manufacturing capacity in trades such as structures and façades”, said Michel Elizalde, CEO of the ACR Group.

The company has obtained this data from its construction sites in Madrid and is convinced that the inflationary figures can be extrapolated to other companies in the sector and to other regions such as Barcelona, Málaga, País Vasco and Zaragoza, where the housing market has reactivated.

Nevertheless, at the level of the general Spanish market, that rise is not being reflected in the most active areas. The statistics from the Ministry of Development indicate that in October 2017 (latest available figures), the cost of residential constructions had risen by 5.5 points since 2010. Sources at ACR report that the minimums were recorded in 2012 and 2013 after prices had been contained and have only been starting to rise since 2016.

“There is more tension when it comes to labour costs”, acknowledged Elizalde, basically due to the lack of qualified professionals in certain trades such as framers and rebar workers, according to ACR, as well as those involved with bricklaying, experts in partition walls, façades, flooring, tiling and carpenters. That causes teams and subcontractors to change construction site in the middle of house building projects if another company offers to pay them more.

“Contractors are suffering from this situation,” said the Head of ACR, given that property developers are contracting turnkey projects with fixed costs and the construction companies are, in turn, those who are suffering from a lack of professionals.

“There is a shortage of trained professionals because many of those who left during the crisis are not coming back or have now retired”, said the director.

In YoY terms, prices have increased by the most in glass making (25.2%), façades (15.4%), earth moving (15.6%) and structures (13.4%).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake