Out-Law News 1 min. read

‘Megaprojects set to boost value of UAE construction projects to $315bn’


The value of announced and planned construction projects in the United Arab Emirates (UAE) is set to hit $315 billion in 2014, according to a new report.

Consultancy firm EC Harris said (6-page / 4.16 MB PDF) the UAE’s construction market is predicted to return to near full capacity, “with a number of megaprojects in the pipeline and the ramping up of social infrastructure spend”.

As of May 2014, the report said $212bn worth of construction projects was already under way.

EC Harris’ head of property and social infrastructure Christopher Seymour said: “The UAE has experienced a shifting momentum of activity over the past decade with 2009 onwards being difficult years for the market. The dynamic has changed from a period of negative to low inflation over the last few years to a period of moderate increase.”

Seymour said: “The market is finally showing real signs of recovery and prospective growth suggesting that the construction market will remain strong this year. We are seeing tenders in the market covering the full range of projects including large scale programmes and also smaller schemes right down to the small fit out work.”

Sachin Kerur of Pinsent Masons, the law firm behind Out-Law.com, endorsed that analysis and said the market “needed to be vigilant about the dark clouds of inflation”. Kerur said: “Given the procurement programmes unfolding again across the region, we are seeing significant pressure on wages, materials and other similar inputs and the regional industry will need to recognise the threat of an overheating market.”

According to EC Harris’ Construction Cost Index, construction prices in the UAE are set to rise by 4% to 5% over the duration of the year and approximately 6% in 2015.

In addition, the report highlights what it said are “key discrepancies between the emirate of Abu Dhabi and Dubai, as both cities are the country’s growth drivers”. Dubai’s real estate market “is stronger and more sustainable whilst Abu Dhabi’s market is steady,” the report said. However, the report said the capital may increase construction spend in the latter half of 2014 and early 2015.

The report said: “The UAE’s rapid growth, urbanisation and young population will continue to fuel demand across leisure, infrastructure, real estate and utilities sectors. However, with Gulf Cooperation Council markets, such as Qatar and Saudi, undergoing similar diversification and investment programmes, UAE is placed on further pressure as it is in close competition with its neighbouring economies.”

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