The Big 5 Business Conference

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Under the strapline, “Building Future Cities of the Middle East”, The Big 5 Business Conference took place at the Monarch Hotel on Tuesday, with a number of key speakers offering their opinions on the future of the construction sector in this part of the world.

Speaking to a select audience, the conference aimed to focus on challenges, opportunities and lessons learnt, for what has been a chastening experience for the global industry, and Dubai in particular.

A project overview of the GCC industry was provided by Emil Rademeyer, director of Proleads, who indicated that, overall, there is around half a trillion dollars worth of building projects currently under way in the region. In a breakdown of those projects, Rademeyer revealed that 48% were being executed, with 27% in the pre-execution phase. Around 20% of these projects are on hold, and 5% have been cancelled.

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In addition, the Proleads executive explained that project sustainability levels – i.e. those projects that have actually been announced versus those that have actually been completed or are in the execution phase – had unsurprisingly dipped over the course of 2008, but said that he was hopeful that the trend in previous years would continue.

“There is still a lot of liquidity in the market in the UAE,” Rademeyer said. “And it’s one of the few places in the world, like Brazil and China, where this is still the case. As a construction player, you need to be in places like this.”

The Proleads director then posed the question as to whether the Middle East vision would become a reality. “I think it will, but what are the challenges, and can we build better?” he commented. “How does escrow affect the outcome? What have we learnt from litigation, and can we really afford to go green?”

Answering some of those questions was the charismatic MAG Group chief executive officer, Mohammed Nimer, who had some forthright opinions about how the market needed to change in order to bank upon Dubai’s unique capabilities. In particular, Nimer argued that the off-plan model, which has served to drive the emirate’s real estate market to unprecedented levels, was now unsustainable. For potential remedies, the executive outlined a six-point plan, which he argued would put the market back on its feet.

Firstly, Nimer indicated that greater transparency and tougher regulations were needed to reassure and offer confidence to possible investors. In addition, liquidity also needs to be approved, especially as around 30-50% of the full purchase price of the property is still being demanded from the buyer. The MAG Group executive also argued that the visa rules should be relaxed, although this should not amount as far as citizenship for tenants.

Furthermore, Nimer argued that the UAE needed to work harder to attract expatriates and foreign companies to its shores, and, as already mentioned, companies needed to move away from the offplan model. “Lastly, there is a real need to get back to basics,” Nimer added. “We need to focus on solid market fundamentals as opposed to sentiment – that’s the true path to recovery.”