Mixed opinions among experts about sector outlook

The UAE remains the second most active construction market in the GCC after Saudi Arabia despite being hit hard by the global economic crisis.

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Experts on the economy and the construction sector have revealed mixed feelings about the future of the building industry and its outlook for next year.

Whilst industry analysts in the GCC seem relatively optimistic about the years to come, UK organisation the Construction Products Association (CPA) has suggested the industry is facing a double-dip recession.

A study by the Dubai Chamber of Commerce and Industry earlier this year said that although 2010 had been tough, construction developers in the UAE particularly were expecting a more promising 2011 and beyond, with an increase in projects and a focus on company diversification.

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By contrast, the CPA predicts that construction is heading for a double dip recession, saying it will be the first major industry to fall back into recession following temporary recovery, with a decline in output in H2 of 2010 and early 2011.

Commenting on the forecast, CPA CEO Michael Ankers said: “In 2009 the construction industry suffered its sharpest fall in output since 1974 and whilst there was a bounce back in the first six months of this year, the figures are deceptive and not the basis for a long-term recovery.

“Although 2010 as a whole is likely to be slightly better than 2009, it is very much a year of two halves with construction output slipping back in the second half of the year as a result of growing uncertainty in the housing market and cuts in spending.”

He added: “Whilst we can see the prospects for a pick-up in output in 2012 and the following two years, this recovery is going be slow and hold back a more rapid growth in the wider economy. Even by 2014, output in the industry will not even have recovered to the levels it experienced in 2003.”

Observers in the GCC however, remain fairly confident about seeing a rise in new projects, whilst pointing out that the drop in material prices and labour costs has been a great benefit for many developers, who are expected to make significant cost savings this year.