UAE contractors upbeat about real estate market
Revival of government projects and recent major announcements by developers fuel cheer
Published: July 29, 2012 GULF NEWS
Dubai: The value of completed construction projects in the Gulf Cooperation Council (GCC) is expected to jump 71 per cent to $79.8 billion (Dh293.11 billion) this year with the commercial property and hotel sectors leading the way, according to a new study.
In 2011, completed construction projects in the GCC were valued at $46.5 billion, according to new research by Ventures ME, commissioned by dmg events, the organising team behind the Index International Design Exhibition.
Commercial real estate projects are set to double in value to $15.3 billion this year from $7.7 billion in 2011, with four of the six GCC countries ranking among the top 20 retail destinations, according to the Global Retail Development Index.
The hotel and hospitality sector’s project values are expected to triple to $7.3 billion in 2012, up from $2.7 billion in 2011, the report showed.
The growth is a direct result of increased demand for hotel space in the GCC where room revenues are set to reach $22 billion in 2012, and expected to increase to $27 billion by 2015, the report added.
In terms of building projects in the GCC, contracts worth over $57.8 billion were awarded in 2011 across residential, commercial, hospitality, and retail sectors.
The sector is likely to increase by 13 per cent to $65.5 billion by the end of the year, according to the research.
UAE-based contractors seemed upbeat about the real estate market in 2012, citing the revival of government projects and major companies announcing projects recently.
“July and August will be dead months due to the summer and Ramadan, but in the last quarter, we expect things to pick up. I expect a positive transformation in 2013,” Bishoy Azmy, chief executive of Al Shafar General Contracting (ASGC), told Gulf News.
Bellwethers’ new projects
Major players such as Emaar, Dubai Properties Group, and Nakheel have recently announced new projects.
“I am positive about construction in Dubai. We’ve seen a pick up in construction contracts and in serious tenders. We’ve seen government project revivals, which was and remains the biggest client for construction work,” Azmy said.
He said his optimism was based on major companies getting “back again in the game,” and positive sales in the real estate industry.
Ventures ME calculated a growth forecast for the GCC based on its extensive database of construction projects across the Mena region, Samantha Kane-Macdonald, Index senior project manager, said.
Asked if the UAE can or should continue to rely on the so-called “safe haven” status resulting from the Arab Spring, she said in an email to Gulf News: “Analysts have positively revised the growth estimates for the GCC region due to its strong and consistent economic growth, political stability amidst neighbouring unrest, strong oil prices that are boosting revenues, including clear cut government plans and vast spending to fuel its non-oil sectors.”
Growth forecast revised
Recently, the Bank of America Merrill Lynch revised the forecast for GCC’s economic growth for 2012 from 3.4 per cent to 4.3 per cent, with the main contribution from Saudi Arabia, followed by Qatar and the UAE.
The 22nd annual edition of Index will run from September 24 to 27 at the Dubai World Trade Centre.