Real estate and construction will be the drivers of economic growth in the UAE, the Minister of Economy, said at a construction summit in the capital yesterday.
Sheikha Lubna bint Khalid Al Qasimi said in her opening remarks the two sectors will grow by 24.4 per cent and 21.6 per cent consecutively by 2010. Together they will contribute 23 per cent the national economy by 2010, compared to 16 per cent in 2006.
More than 400 international property experts and developers attended the Arabian World Construction Summit organised by Meed magazine at the Emirates Palace Hotel in Abu Dhabi. Sheikha Lubna said Abu Dhabi has allocated 51 per cent of its non-oil budget to construction projects for the next five years.
She added the construction sector contributed around Dh40 billion to national production in 2007 and said the sector stood to generate about Dh1 trillion in the long term.
Assisting growth have been government facilitated commercial measures – such as the use of automation and the application of many organisational reforms – that have made investment in the residential sector and entertainment facilities easier and profitable.
The UAE’s strategic location has also helped it to become the main destination for construction projects, added Sheikha Lubna.
The country is around seven hours from Europe, Africa, India, Central, Southern and Western Asia and China. The UAE is also close to around half of the world’s population and most developing markets.
The number of construction projects under way in the Gulf total around Dh5.9trn, she added, an increase of around 33 per cent compared to 2007. In a cautionary note, she highlighted the region’s unprecedented construction boom – in addition to producing some of the world’s greatest engineering feats – has shed light on new challenges and dangers. Sheikha Lubna said it is important the construction sector determines whether this solid growth is sustainable or if the markets are about to slow down.
She called on the industry to monitor international and regional factors that could lead to recession in the sector, especially in terms of the availability of building materials and its labour force.
It is projected demand for steel and iron will increase from five million tonnes in 2007 to 10 million tonnes in 2010. Sheikha Lubna encouraged developers to draw up clear and suitable strategies to make sure building materials are available for the construction sector.
Edmund O’Sullivan, conference chairman from Meed, said the value of new construction projects in the region exceeds $1.8trn, a figure that is double the gross domestic production of the six GCC countries. Meanwhile, he added the boom seen in the UAE and Gulf is not temporary, but rather is continual and provides job
opportunities for top property developers in the world.
However, he seconded the minister’s call for a definitive strategy to reduce the dangers that the construction industry faces. O’Sullivan said the next few periods will see the implementation of projects in the region with a value of around $884 billion (Dh3.24trn). Most of the projects are still in the planning phase.
In an exclusive statement to Emirates Business, Sulaiman Al Fahim, CEO of Hydra Properties, said the establishment of strong alliances is the best way to fight the challenges facing the sector and make sure mammoth projects are delivered on time.
He added Hydra will begin work on a residential tower in Libya with a value of $150m during the coming weeks.
Meanwhile, Fatima Al Jaber, CEO of Al Jaber Group, admitted some big projects have seen delays.
But she added Al Jaber Group, the UAE’s biggest contracting company, expects to increase their capital investments in 2008
to $6bn, compared to $3.4bn in 2007.
Meed organised the summit in conjunction with Nakheel, Al Qudra, Sorouh, Hydra and Abu Dhabi Commercial Bank.
UAE tops MEED survey of attractive markets
During the Arabian World Construction Summit’s main session, Meed surveyed opinions of the movers and shakers in the construction sector in the Gulf.
The UAE came first in terms of companies’ most attractive markets, while Saudi Arabia came second and Qatar third.
Some 88 per cent of property developers and experts participating at the summit responded that they expected their profits to increase during the current year by big percentages compared to 2007, while eight per cent said they expected levels to remain the same. In response to the challenges the construction sector in the Gulf might face, 37 per cent of participants agreed the lack of experienced and skilled labour was a problem, while 25 per cent blamed the shortage of management candidates and 17 per cent said inflation was
‘Construction to drive UAE economy’