Dubai: The UAE’s construction industry is waiting for that long anticipated lift-off - the only question is whether it will come about in the first quarter of 2017 or might be delayed slightly beyond that. But that one will definitely happen in the near term is not in doubt at all.
And it needn’t be an Expo 2020 driven build-up too that Dubai will bear witness to. The traditional levers of Dubai’s development narrative - the infrastructure, the Metro extension, the next generation of super malls and signature skyscrapers, including the next tallest in the world from Emaar - are all going to be there.
Even if just 20-30 per cent of the initial contracts related to these projects are awarded, it could set up 2017 to be as significant for the UAE’s construction sector as anything that happened between 2012-mid-2014, which was when oil prices were flying high.“The retail construction sector is likely to see growth as the mall space in Dubai is to double to meet the anticipated increase in demand,” said Sanjay Bhatia, Managing Director of Alpen Capital (M.E.) Ltd, the advisory firm. “The region’s hospitality and leisure construction industry will also benefit from higher tourist inflows.”
It will be very difficult to comment on which period had the best first-half for the construction industry given that large-scale projects span over few years,” said Bhatia. “However, we feel that that the period from 2012 to 2014 - where overall economic activity of Gulf countries soared - and the sentiment was generally upbeat.”
Breathing space
These sentiments - or variants of them - will set the stage for the latest Big 5 show, which opens Monday at the Dubai International Exhibition Centre. By not pinning all expectations on the Expo 2020 project spending, the construction sector is also giving itself some breathing space.
Dubai’s real estate sector has been seeing some stability of late, leading So, which are the major projects out there that can take up much of the current slack? The Tower from Emaar - set a four-year build timeline to be the world’s next tallest - should see some activity on the ground at the Dubai Creek Harbour master-development. That also means flagging of the retail district adjoining it. Nakheel will have the tenders for the Deira Islands Mall as well as the twin-tower Palm 360 and Ibn Battuta Residences. Dubai Holding with its Mall of the World and jumeirah Central mega-projects should putting in place early markers.
There will also be the multi-year, multi-phase development programmes associated with the Dubai South, Dubai Wholesale City and Dubai Industrial Park. And each of these are as massive as they get in terms of scale.
“Tenders awarded in Dubai have risen by more than 20 per cent on a year-on-year basis,” said Sameer Lakhani, Managing Director of Global Capital Partners, which operates a quarry in the northern emirates. “These are combinations of infrastructure related contracts as well as real estate specific.
“Some of the contracts are definitely longer term in nature… but we appear to be in a cycle where 2017 promises to deliver further stronger growth in terms of new contracts. The larger ticket awards are in the final stages of being negotiated and are likely to come out soon as the city ramps up for a construction boom in the run up to 2020.”
Factbox: Construction industry fundamentals are favourable
* Building material prices in the UAE have been steady on account of the continuing strength of the dollar. Global concerns over economic growth are also keeping prices steady, while there is no supply-demand mismatches on key commodities.
* Being overly dependent on state-sponsored initiatives, the construction markets in Saudi Arabia and Qatar have got hurdles to clear. “Several state-funded projects in Saudi Arabia have been delayed and some of the largest contractors have also had to cut down their workforce substantially,” said Sanjay Bhatia of Alpen Capital.
“If you take Qatar, the real estate index released by the Qatar Central Bank saw a steady fall in prices in 2016, which also indicates the slowing down of the construction market in the country. We feel that the public spending on infrastructure ahead of the 2022 Fifa World Cup as well as for the Qatar National Vision 2030 programme will keep the country’s construction sector generally buoyant.”
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