The first half of this year saw an improvement in construction contract awards across the UAE compared to the same period last year with the deals totalling $22 billion, a report said.
The full-year contract awards are expected to total $45 billion, if not slightly ahead, said the Faithful + Gould Construction Intelligence Report – UAE Update, written by David Clifton, regional development director.
The year 2016 yielded a total of $43 billion awards and was the most difﬁcult year since 2012.
With the backlog of work for the UAE construction market having shrunk by around $17 billion in 2016, there has been a decrease in market size. The quantum and value of projects planned or being delivered is broadly ﬂat, although major announcements such as Marsa Al Arab and Emirates Towers Business Park are keeping the pipeline more promising, the report said.
“When reviewing this year’s awards, it is evident that mega projects are a rarity, making up a small percentage of the values compared to previous years. The stand-out schemes in real estate that moved to site are Nakheel’s Deira Mall ($1.14 billion) and ICD’s One Zabeel (around $1 billion).
“The reduction in mega schemes can be broadly explained by a level of high selectivity by developers, constrained funding and a bias towards areas where the masterplan is complete and therefore infrastructure burden is minimised (for example, Downtown and Business Bay Dubai). As funding issues start to ease, we expect new masterplans will move through to construction,” the report said.
Nakheel is the most active by value and one of the few to award a mega project. For the rest of 2017 and early 2018, the industry is looking at Dubai Holdings and its plans. If its schemes move swiftly, significant growth could return in the short term, it said.
On a positive note, with the expected revenue of Dh12 billion ($3.27 billion) in 2018 from VAT (value added tax), the federal government will have further ﬂexibility to invest in social infrastructure – such as schools, hospitals and roads – which should act as a boost to the market, the report said.