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Building materials price hikes may increase cost of projects in Georgia

Construction Materials 16 January 2021 20:25
Building materials price hikes may increase cost of projects in Georgia

BAKU, Azerbaijan, Jan. 16

By Tamilla Mammadova – Trend:

Georgia exports rebar mainly from Ukraine, Turkey, and Iran, its cost has already increased by 40 percent, Trend reports via Georgian media.

Meanwhile, prices for construction materials, including rebar, have risen drastically on the international market.

According to the Caucasus Road Director Paata Trapaidze, the building materials price hikes may increase the cost of projects within the country, including an increase in real estate prices.

"Rebar, both local and Ukrainian, has risen in price due to an increase in world energy usage, as the rebar production requires high energy consumption. Apart from that, building materials production is affected by oil price hikes. The infrastructure projects still in the works around the world, moreover, many countries are investing heavily to boost the economy and create new jobs, " he explains.

In Trapaidze’s words, spending on donor-funded projects remains unchanged in Georgia– in the case of the rising price of materials, their cost is indexed.

"We would like the government to introduce the same practice in the government tenders, but unfortunately, it’s too early to speak about this so any company with experience should take this factor into account – if it plans profit at the level of 7-8 percent, it should be prepared for a 2 percent decline in case of price hikes for building materials. But it's better than doing nothing," Trapaidze notes.

Domus construction believes that such large-scale changes will affect the cost of apartments in the future, but will not cause a long-term shut down for the construction sector.

The company representatives also consider it necessary to revise the rules for state tenders considering the price factor.

"If building materials rise in price by 5-10 percent, the terms of the contract should be revised. When the cost of work can’t be revised but prices suddenly increased, the contract amount may not be enough that can pose a big risk to business", say in the company.

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