Dubai: Limited infrastructure spending and the odd high-profile hotel development have not done much to lift spirits in the construction sector in Dubai and Abu Dhabi, where payment issues and stalled projects — as well as scoring contracts abroad — are forefront in the minds of contractors.

“I don’t believe there is much new project activity or meaningful new capital infusions,” said Saud Masoud, chief executive of SM Advisory Group and former real estate analyst with Rasmala.

“I think there is much development to take place, but near-term regional event risk and global economic uncertainty are keeping things from taking off.”

Said Hirsh, an analyst at Capital Economics, agrees. He points out that many UAE contractors are looking abroad, rather than at home, to find new projects.

“Growth for the UAE’s construction companies is likely to come from abroad. I would watch each company’s external growth strategy, particularly in Saudi Arabia, and to some extent in Qatar,” Hirsh said.

“In relation to a revival in the sector, I don’t think that we can expect activity levels to return anywhere close to pre-crisis levels in the UAE’s domestic market. The real estate market is unlikely to return anytime soon and spending on infrastructure is relatively small compared with other regional markets,” he added.

However, leading real estate agencies in Dubai are talking about a steady rise in inquiries, the majority of them locally generated. And over a month, between 20 and 30 per cent of these actually translate into sales.

“A herd mentality needs to built up as such investments are often based on gathering consensus opinion,” said Deepak Lalwani, director at the London investment consultancy, Lalcap.

With more buyers around, investors holding multiple properties — many had bought at the market peak in 2008 — are using the present scenario to seek an exit at more favourable terms than were available just six months ago.

Abu Dhabi has been recording increased rental activity, particularly in the mid-to-premium end of the residential space. There is also a lot of good quality stock coming on line soon.

“What the property market needs now is developments selling at values which [are] close to what they should be and a lot of genuine buyers,” said an agent.

— With additional inputs from Manoj Nair, Associate Editor