Dh778bn projects underway in the UAE

Construction projects worth $212 billion (Dh778 billion) are under construction in the UAE but only $25.3bn (Dh93 billion) projects are in the tendering or pre-tender phase, which is a worrisome for the sector’s sustainability, Business Monitor International said in its Q2 2014 update.

“We have logged $313bn (Dh1.14 trillion) of construction projects in our Key Projects Database across the infrastructure, residential and non-residential construction sectors. About $212bn of this figure is related to projects currently under construction – many of which have entered or re-entered that phase over the end of 2013 and H1 2014,” BMI said.

It said 2014 should be the year in which the UAE’s construction industry returns to solid growth as 2013 saw the reactivation of numerous delayed projects and the award of many new ventures. Dubai’s real estate market is looking strong and more sustainable than was the case before the 2008 crash and Abu Dhabi's market seems to have bottomed out.

“We also note the risk of the ‘funding cliff’ within Dubai’s financial sector is being addressed and we do not expect there to be a dramatic tightening of liquidity over the coming year. We have also upgraded our medium-term growth forecasts in light of Dubai winning the 2020 Expo,” BMI added.

But BMI warned that its “Key Project Database reveals a worryingly thin project pipeline, with only $25.3bn in the tendering or pre-tender phase. Without the projects to replace ones currently under construction, the solid return to growth we are currently forecasting will not be sustainable.”

The major projects under construction include Etihad Railway, Al Maktoum Airport, Mohammed bin Rashid City, Dubai Tram, Dubailand, Dubai Creek Extension, Dubai Canal, Dubai Frame, Louvre Museum, Al Ain aerospace city, Abu Dhabi Airport expansion among others.

Kuwait Finance House (KFH) said in a report that it maintains its outlook for real growth in the UAE’s construction sector for 2014.

“We highlight there has been increasing volumes of positive news surrounding the industry over H1 2014 and that with the awarding of the Expo 2020 to Dubai, there is going to be concentrated activity in the infrastructure, and residential and non-residential sectors in future,” it said.

It is expected that the Expo 2020 site will see the construction of more than 2,000 apartments, banks, retail outlets and restaurants.

KFH said the fiscal cliff – or the maturing of the huge amount of debt – has been tackled very well by Dubai and its entities.

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