UAE Continues to Lead GCC Construction and Infrastructure with $714.9 Billion in Active Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Despite the fallout from the recent economic crisis, the United Arab Emirates (UAE) continues to dominate the construction and infrastructure sector in the Gulf Cooperation Council (GCC) region with $714.9 billion in active projects, according to the latest report published by the Dubai Chamber of Commerce and Industry (Dubai, UAE).

The report, compiled from statistics from government agencies in the GCC region, shows a regional total of $1.37 trillion in active projects, with the UAE contributing more than half of the total, despite the UAE construction industry suffering what the report termed "a challenging year" in 2009.

The UAE enjoyed a construction boom until the end of 2008, with much emphasis placed on large real estate projects in Dubai. However, during the economic downturn in 2009, many projects were either cancelled or put on hold, and few new projects were started.

It now appears that with the short-term focus of the UAE government on developing infrastructure projects, Abu Dhabi will assume the leading role, taking over from Dubai, as developers switch from private to public sector projects and form strategic alliances to offset increased competition. Five of the GCC region's top 10 projects currently active or at the planning stage are in or around Abu Dhabi.

The UAE total of $714.9 billion is heavily dominated by real estate and construction projects, which account for $629.5 billion. The remainder is split between infrastructure ($75.1 billion) and water and waste projects ($10.2 billion). The largest UAE project--and the largest in the GCC region--is the community development of five areas between Abu Dhabi International Airport and Mohammed bin Zayed City, at an estimated budget of $40 billion.

Within the GCC region, Saudi Arabia is the second-most active in terms of total value of projects, contributing 21% of the region's total. The Saudi Arabian total of $283.8 billion is split among $230.8 billion in real estate and construction; $50 billion in infrastructure; and $3 billion in water and waste.

Kuwait, with 13% of the GCC total at $184.8 billion, has real estate and construction projects valued at $170 billion; infrastructure projects worth $12.6 billion; and the remaining $2 billion allocated to water and waste projects.

Qatar has $7.1 billion allocated to water and waste projects from its total of $92.6 billion--at 7.7%, the highest proportion of all six GCC countries--with real estate and construction claiming $55.9 billion and infrastructure $29.6 billion.

Oman has the highest proportion of its total $48.3 billion costs allocated to infrastructure projects, with 35.6%, or $17.2 billion, destined for these projects. The remainder is spread among real estate and construction with $27.6 billion, and water and waste projects budgeted at $3.5 billion.

Completing the statistics from the GCC region, Bahrain has a total of $44 billion allocated to active projects, with real estate and construction estimated at $37 billion; infrastructure at $5.8 billion; and water and waste at $1.4 billion.

The economic crisis and the subsequent drop in demand for real estate caused a drop in the price of construction materials. This, combined with the drop in labor costs, is expected to benefit many developers in 2011 and onward, leading to significant cost savings.

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