Gulf construction boom valued at US $50 billion
UAE said to account for $30 billion of GCC projects with most of the construction based in Dubai
Construction Week has estimated the value of the Gulf’s on-going construction projects in a poll of industry watchers at around US $50 billion. They also say that what is currently being built is just about 10% of what has been planned or is on the drawing board, especially in Dubai.
The tiny emirate on the eastern edge of the Arabian peninsula is also being credited with having started off the new burst and is now said to account for the highest per square kilometre of construction activity in the world.
Dubai’s key role in the recent explosion of construction activity in the Gulf is obvious: of the $50 billion estimated Gulf-wide building spend, 60% or some $30 billion, is in the UAE alone; and the majority of that is in Dubai.
Like the first phase of infrastructure development in the Gulf that followed the discovery and export of oil, this phase too is mostly government-led. But, the difference this time around, however, is the much higher level of private sector participation and the involvement of foreigners in boosting real estate development through widespread property purchases.
Allowing foreigners to hold freehold property in the Gulf Cooperation Council (GCC) countries for the first time has been a key factor in the building boom that the Gulf is currently witnessing. This has catalysed private sector investment into real estate development, which has generated premiums of more than 100% within a year in some cases.
Creativity is mushrooming with projects such as The Palms in Dubai, Amwaj Islands in Bahrain, The Pearl in Qatar and The Wave in Oman, all coming off the dream-boards of the developers and designers. The key driver, however, continues to be the government. With oil prices peaking in recent decades, the Gulf states have had an unforeseen bonanza. By the end of the first nine months, most states had already achieved their annual revenue targets. The surpluses that are filling the oil-rich Gulf’s coffers are expected to continue to fuel the next round of construction activity in the region.
Organisers of the Middle East’s largest and longest established exhibition for the construction and contracting industry, the Big 5, say that: “The current boom in the construction industry in the UAE is increasing with government spending set to continue over the next ten years on the creation of new infrastructure projects and office and residential accommodation.”
Bob Hughes of dmg world media Dubai Ltd. says that, “Activity in this industry is at a premium with current large-scale projects due for completion representing just 10% of those to be implemented.” Throughout the Middle East, construction activity is currently running at its highest level for over 20 years. The Gulf countries have a young population and massive housing needs, while the oil wealth drives a construction boom in both public and private sectors, say dmg officials.