Has all spare contracting capacity in UAE gone?

Looking for answers from CW Leaders in Construction Summit next month

COMMENT, Business, Conference, Dubai Grosvenor House Hotel, Leaders in Construction, Uae

This week (3 September) we host our Leaders in Construction UAE conference at Dubai’s Grosvenor House hotel.

I am particularly looking forward to this year’s event* for a number of reasons. Firstly, it’s always good to catch up with contacts and some of the regular contributors to the magazine. But perhaps more interestingly, it’s a great way of taking the industry’s pulse at what is an interesting time.

The first of these annual events that I attended two years ago still had quite a sombre mood to it. There were many people pointing to clouds on the horizon, and when Damac’s Ziad El Chaar confidently predicted that 2013 would be the year in which Dubai made its big comeback he had his fair share of doubters in the room.

And even though he was proved right, the feeling among contractors last year was that although lots of big projects had been announced, few had actually progressed to site and most of the Emirate’s stalled schemes had remained that way.

This year, there can be no doubt that prospects have improved. The recent study published by Ventures Middle East for The Big 5 trade show predicted that contract awards in the UAE are likely to grow by 17% this year to $47.2bn and stalled schemes aplenty have restarted. Moreover, a UAE country report published last week by project management consultancy EC Harris stated that the strengthening of property markets in both Dubai and Abu Dhabi, coupled with a growing pipeline of megaprojects and rising infrastructure spend has meant contractors are finding themselves increasingly busy.

It said the value of announced and planned projects is $315bn – $212bn of which are already under construction.

It also argued the sector is nearing capacity as a result, pointing to a “significant upturn” in construction costs. Tender prices continued to fall by 3% in 2013, reflecting contractors’ views that last year’s market generated more noise than heat. However, EC Harris is forecasting a 4-5% rise in prices in 2014, followed by a 6% increase next year.

A similar sentiment is expressed by contractors and recruiters in our feature on the region’s jobs market, with firms expecting to have to offer better pay and packages to convince potential employees to relocate to the region, although the relatively straightforward visa processes and favourable lifestyle means UAE firms have an edge over GCC competitors.

All of this has left me wondering how the industry has found itself in a situation where, within a matter of months, contractors have moved from driving down prices to win work to having full order books and be rapidly scaling up? Was there really so little capacity left in the sector after the brutal downturn experienced in recent years? Or is too much being made of a recovery too soon?

I await hearing what our Leaders in Construction will say to find out.

*At the time of going to press, there were a small number of free places available. Contact Amanda Elisha on +971 4 444 3463 for details.

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