Business | Construction

Construction industry set to rebound

303 projects worth $143b are ready to be built in addition to 1,300 under way

  • By Saifur Rahman, Business Editor
  • Published: 00:00 November 22, 2010
  • Gulf News

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  • Image Credit: Megan Hirons Mahon, Gulf News
  • UAE is still the largest construction market in the GCC

Dubai: Demand for construction in the Middle East is set to soar as the industry recovers from the economic downturn and the region forges ahead with major development, industry officials said.

Proleads Global, a UAE-based market research company has reported that nearly 1,300 projects valued at more than $418 billion (Dh1.5 trillion) are under construction in the UAE, with an additional 303 projects worth $143 billion in the design, planning or bidding stage.

A study released by the Dubai Chamber of Commerce and Industry in August states that the UAE is still the largest construction market in the GCC with $714.8 billion worth of projects in progress or in the planning stages.

The UAE government has been supporting the construction industry through sizeable investment in infrastructure to help the economy through the global economic slowdown in the short-term and guarantee sustainable growth for the country in the mid- and long-term.

Transportation funding

Abu Dhabi, which has a less developed transport infrastructure than Dubai and suffers chronic congestion problems, is expected to spend $68 billion from 2010 to 2015 on public transport alone.

Government spending on infrastructure projects is also giving the sector a considerable boost. The UAE government earmarked almost $12 billion from the 2010 budget for infrastructure projects, according to Business Monitor International. Saudi Arabia allocated $3.17 billion in its 2010 budget for construction of 6,400 kilometres of roads.

"The market might be slightly low, but the outlook is not," Dr Gangaramani, President of Al Faraa Construction Group, told Gulf News. "The governments are rolling out lots of projects, especially in Abu Dhabi where large-scale projects are going to drive the demand up for some time."

According to Ventures Middle East, more than $14 billion worth of construction contracts were awarded in the GCC during April and May, with around $8.7 billion awarded in the UAE. The firm has also forecast 10 to 15 per cent growth in contracts awarded in 2010.

Last April, projects worth millions of dollars commenced including the Water Garden City in Bahrain ($6.6 billion), Musheireb in Doha, Qatar ($430 million), the Al Ain Convention Center District ($953 million), Saadiyat Island Development Cultural District — New York University ($865 million) and Business Bay Development, The Opus Tower ($469 million), in the UAE.

Humaid Salem, General Manager of the UAE Contractor's Association said: "As major developers start to repay contractors, they will be able to repay their sub-contractors and suppliers, giving a major boost to the industry as a whole. This will lead to more growth in the sector, and create a renewed demand for construction machinery as new projects get underway."

Capitalise on growth

With more than $1.3 trillion projects on the horizon in the GCC, according to the latest data from MEED Projects, manufacturers and suppliers of plant, machinery and construction vehicles will have an excellent opportunity to capitalise on Middle East construction growth.

Dr Nasser Hamad Al Hajeri, Chairman of Gulf Automobile Industry Corp, said the scale and number of development projects, particularly in Saudi Arabia, will increase demand for construction machinery. "We are witnessing high demand in Saudi Arabia and Qatar due to the large number of major construction projects there, and demand is also growing in the UAE. To meet market demand, we are launching a light duty truck with capacity from one to ten tonnes and a wheel loader towards the end of the year."

Fibo intercon, a leading Danish supplier to the global concrete industry with more than 70 years experience, said the Middle East presents many opportunities for manufacturers from Europe looking to expand their operations following the downturn.

Stronger position

"We are focusing a lot of attention on the Arab markets at the moment. We want to strengthen our position in the Mena region, extend our representative network and establish our own sales organisation in the UAE to capitalise on the ongoing opportunities here," said Jens Bollerup, Managing Director and CEO of Fibo intercon.

In a recent report, the International Monetary Fund estimated the total value of projects planned in the UAE at a staggering $918 billion in construction, oil and gas, petrochemicals, real estate, industry and other sectors.

The value accounts for nearly 42 per cent of the total major ventures to be implemented by the six-nation Gulf Cooperation Council in the medium term as part of a strategy to diversify their oil-reliant economy and upgrade their infrastructure, the IMF said.

The second most active market in the GCC after the UAE is Saudi Arabia, with $283.8 billion worth of projects in the pipeline.

The Big 5 Show and the Big 5 PMV take place from today until Thursday at the Dubai International Convention and Exhibition Centre.

Nick Webb, Director of Streamline Marketing Group, organisers of the Big 5 PMV said despite a tough year for the global construction industry in 2009, the outlook for the region's construction industry is positive.

"Despite the slowdown of construction projects in 2010, the UAE has shown great resilience and resurgence with many postponed projects now actively being worked on and several new projects being announced," he said.

"The Big 5 PMV is a testament to this with over 100 exhibitors from almost 20 countries participating with us in such a challenging year, proving that Dubai remains a vital business hub from which to access this prosperous region."

In the last few years, the Middle East has established as one of the most attractive construction and engineering markets for international contractors.

However, this time a lot of emphasis will be on green building products at the Big 5 Show.

When: November 22 to 25, 2010Where: Dubai International Convention and Exhibition CentreTime: Open 11am to 8pm daily

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