DoBuy
Contractor's are very devious and sometimes clever creatures! If not clever then usually aggressive and manipulative!
If the Contractor cannot absorb costs there are 101 scenerios for resolution. At the end of the day the Developer wants to make his margin, maintain his reputation to ensure repeat business. It is in everyones best interest to finish as quickly as possible with the required quality.
It all comes down to negotiation, commom sense and good business skills. If a Contractor can't absorb costs the Client has to make decisions. Firstly he or his PM Company should spot this prior to works ceasing or even slowing. The scale of the costs will need to be assessed and ultimately once the Devloper has had a chance to weigh up all his options, it might simply be the cheapest and quickest solution to financially assist the Contractor.
If the Contractor folds or is removed from the project, for sure it will cost the Developer more money to reemploy at revised rates. Also time will be lost during re-mobilisation. Again the developer will weigh up what penalties he has for handover to his Clients (you guys the investors). Usually in Dubai this is Zero but some developers are offering guarantees.
You are quite right there are still apartments for sale at 750dhs/sqft in Dubai but certainly not in prestigious areas like Dubai Marina, BB, Downtown or JLT. I bought a 1 bed in the Marina at 720 a sqft 2 years ago, definately at lauch price that would be minimum 850-1000 today. Thats a difference of say 30%, so it can be seen that Developers prices are increasing in line with Materials and Labour prices.
As an example there are places in Ajman and RAK which are only 20 and 40 miles from Dubai respectively. Some developers are offering apts at 400dhs/sqft in those locations where the labour and materials are the same price as Dubai.
