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As if there isn’t enough gloomy news in the Middle East, Standard & Poor’s comes out with a report that says the construction market in the UAE has virtually collapsed by falling more than 85% in 2008 compared to 2007.
The report cites figures that the value of contracts plummeted from a high of US $98.1 billion in the last quarter of 2007 to a paltry $14.4 billion during the same period last year.
In addition, Dubai-based Meydan last week cancelled its US $1.3 billion racecourse contract with a joint venture of Malaysian construction company WCT and the local Arabtec. Meydan said the cancellation was due to the “non-adherence to the agreed time schedule for construction.”
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The ambitious racecourse was scheduled to be finished in 2010 and open with the Dubai World Cup horse race. It was designed to seat 60,000 people.
The result was that WCT took a staggering hit on its stock prices in Kuala Lumpur trading, losing 30% of its value. It was the biggest loss for the firm since 1995.
Still, it seems as if Dubai’s scheme to continue with infrastructure works has kept many construction companies going while private residential projects also are moving along at a steady clip. To Dubai’s credit, it has handled the crisis smartly by doing what has proven to be successful in past economic crises: Focus on infrastructure.
And while there has been a more cautious approach to Saudi Arabia’s projects, particularly the King Abdullah Economic City under Emaar, the Saudi construction industry so far seems to have managed to stay on target.
All one can do is wait and see.
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