Property Prices and Construction Material Costs Soar
The prices of construction materials continue to rise in both the official and black markets in areas controlled by the Damascus government, leading to a steady increase in property market prices. However, the decrease in demand is pushing the market towards stagnation.
The rising prices are primarily linked to the depreciation of the Syrian pound and increased energy costs. Construction material prices are subject to official government pricing policies, mainly since a significant portion of production is carried out by public sector institutions and companies, which also control marketing and distribution.
In a phenomenon parallel to market stagnation, the prices of some residential units have become lower than the current construction costs, at least in Damascus, according to The Syria Report’s sources. The construction cost per square metre on a basic level ranges from SYP 700,000 to 1 million, varying by location. Meanwhile, the finishing costs per square metre have risen to a minimum of SYP 500,000.
On October 4, the Ministry of Domestic Trade and Consumer Protection issued Decision No. 3219, raising the price per tonne of cement produced by the General Organisation for Cement and Building Materials from SYP 700,000 to 1.76 million, at factory costs (equivalent to USD 150 at the official exchange rate and USD 129 at the black market rate). The ministry’s decision was based on a recommendation made by an economic committee affiliated with the Council of Ministers during its 50th session held on October 2. The ministry clarified that the increase in cement prices was due to the Ministry of Petroleum and Mineral Resources’ recent increase in fuel prices and other energy resources, constituting about 70 percent of the input for cement production.
Over the past years, the Ministry of Domestic Trade has raised the price per tonne of cement several times: from SYP 125,000 as per Decision No. 2603 in 2020 to SYP 175,000 as per Decision No. 1115 in 2021 to SYP 400,000 as per Decision No. 1260 in 2022, and to SYP 700,000 under Decision No. 1677 in June 2023.
A correspondent for The Syria Report in Damascus pointed out that the black market price for cement rose to SYP 4 million per tonne following the Ministry’s Decision No. 3219. Notably, prices in the black market are higher than in the official market. Other sources put the price in the black market a bit lower, around 2.8 million, but still much higher than its official price.
The OMRAN – General Establishment for Domestic Trade of Metals and Building Materials, also known as “Omran” and affiliated with the Ministry of Domestic Trade, is responsible for marketing construction materials produced by the public sector in the official local market, including cement, iron, timber, paints and ceramics. Omran was established by Decree No. 163 in 1970 and has virtually monopolised the cement market since its inception, despite the entry of private sector producers into the market after 2000. Omran compels private cement producers to sell their production to it exclusively during certain seasons, deducting a commission of up to 10 percent on the value of sales. In other seasons, Omran refrains from purchasing from the private sector, leading to an accumulation of their products amidst difficulties in local marketing.
Omran primarily focuses on securing cement for projects undertaken by public sector companies. However, it also provides contractors and citizens with specific quantities of building materials in accordance with the quantity tables included in the official construction permits they hold. The company refrains from selling cement outside these conditions, subject to confiscation and legal accountability. No bag of cement can be sold without an official document to those with an original building permit, a renewal of the permit, or a restoration licence, in addition to craftsmen with monthly vouchers issued by the Craftsmen’s Association.
The recent increase in cement prices has directly reflected in the prices of other building materials. The price of breeze blocks has reached SYP 4,300 per block, whereas last year, it was around SYP 1,000. The increase in cement prices also affects the overall costs of construction work such as plastering, tiling, ceramics and stone cladding.
Omran also dominates the distribution of construction iron produced by public sector companies. However, the presence of private companies producing iron, owned by prominent businessmen such as Ayman Jaber, Mohamed Hamsho, and Samer Foz, who are close to high-ranking officials in the security and military leadership of the regime, reduces the monopoly of the institution on the market and allows for some competition between producers. The price of construction iron has risen from SYP 4 million per tonne in 2022 to SYP 12 million currently.
Sand and gravel are also essential materials in the construction process. They have seen significant price increases, even though a significant portion comes from quarries and rubble dumps managed by prominent businessmen connected to the Fourth Armoured Division of Maher Al-Assad. The cubic metre price of sand has risen from SYP 45,000 in 2022 to SYP 225,000 currently, while the price per cubic metre of gravel has increased from SYP 55,000 to SYP 200,000 currently.