Poised for take off

The UAE’s construction industry is looking forward to being in clover for at least the next five years, and rightly so.

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By  Eudore Chand Published  January 14, 2004

|~|nightview_trunk_200w.jpg|~|High quality projects like the Palm Jumeirah are introducing the use of leading edge engineering techniques.|~|The UAE’s construction industry is looking forward to being in clover for at least the next five years, and rightly so. It is an abrupt turnaround from the apparent downturn only two years ago, which saw many contractors bidding under cost just to stay afloat. Investments in the industry were down by a third, to just Dh20 billion in 2001 from the normal level of countrywide annual investments. Things improved to C+1 level in 2003. The industry remained on the slow track until the first half of 2003, affected by the war clouds that gathered over Iraq from November 2002. But the official end of the war in May has brought a change in industry sentiment. Investments went up and some companies, which downed shutters earlier than usual, began to work late. Staff started being hired and suddenly there was so much demand that suppliers came under pressure to fulfil demand. Prices of commodities, such as steel shot up, pushing the industry towards alternative products, such as aluminium. Order books are full and industry members report they are busy filing tenders and competing for projects. Some even report being overstretched, leading to expansion of the sector in terms of hiring of more staff to deal with the demand, the expansion of work loads and the need for faster and larger imports to catch up with that demand. Also, many firms are expanding into new business sectors and territories. Another noticeable trend is the industry move towards high quality projects. Developments such as the two Palms, the World and the Hydropolis Hotel have resulted in the use of the latest engineering techniques. Other developers, such as the Jumeirah Beach Residence and Emaar Properties, have pushed the industry towards more sophistication. Construction-related companies have had to invest in better technology, products and services to be able to even get close to the larger developments. This is, of course, a welcome and healthy movement. Another market dynamic that was noticeable in 2003 was that Abu Dhabi has begun to move. Capital-based industry members report sizeable business growth of 15% to 20% on average for 2003. The growth rate is expected to pick up speed in 2004 with a boom for another four to five years. The same is true for the region. Following the Iraq War, construction activity is reported to have picked up in all other Gulf countries. It is yet to take off in a big way in the much-anticipated Iraqi reconstruction sector, but nearby Kuwait, Bahrain, UAE and Saudi Arabia are ready for it when it does. All appears rosy for the industry that is on the threshold of a new year and better times. It is hoped that benefits of the upturn would quickly filter down to a better future for the men on the ground and that the lines of unpaid protesting workers at the Labour & Social Affairs Ministry would soon become a thing of the past.||**||

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