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60947
Sun, 05/17/2009 - 13:34
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Q1 sees contracts worth US$10.6bn in UAE
Construction contracts valued at about US$10.60 billion (Dh39bn) were awarded during the first four months of 2009 with Abu Dhabi accounting for almost 58 per cent of the contracts awarded. Dubai accounts for another 33 per cent while the remaining nine per cent is spread across other emirates according to a report in "Emirates Business."
For the period from January to April, the total value of contracts for commercial, residential and industrial projects was US$7.6bn, energy projects US$2.35bn and infrastructure US$600m. In 2009, major contracts awarded so far includes the US$1.3bn deal awarded by the Department of Civil Aviation, Dubai, to Al Jaber Engineering and Contracting for the development of Concourse three at the Dubai International Airport.
Other contracts include the US$545million contract for the construction of St Regis Hotel & Residences on Saadiyat Island to Al Habtoor Murray and Roberts; the US$373m contract to SK Engineering & Construction Company by Tamouh Investments at the City of Lights; and the US$327m contract by Al Fajer Properties for a mixed-use development in Jumeirah Lake Towers to Al Ahmadiah Contracting.
According to statistics revealed by Ventures Middle East, total contracts awarded in Abu Dhabi during the first four months amount to US$6.15bn followed by US$4.45bn in Dubai and other emirates.
Experts say infrastructure and government projects could take precedence over private developments across the GCC and in the UAE.
Aidroos Hassan, Executive Chairman of Middle East Foundations told Emirates Business there are visible signs of greater emphasis on infrastructure development by the governments. "We can expect a boost to the construction sector through infrastructure development. That does not mean private developments will totally come to a halt," said Hassan. The company is expecting to tender for new contracts worth several hundred million during 2009, he added.
As reported earlier, the UAE leads the GCC with infrastructure development projects almost worth US$105bn being planned and under construction.
While US$28.5bn worth of projects are currently under construction in the country, another US$76.9bn worth of projects are being planned during the coming decades.
However, contracts awarded from January to April this year show an overall drop of 75 per cent when compared to the same period in 2008. The value of infrastructure contracts awarded this year also fell sharply by almost 89.4 per cent compared to the same period last year.
Almost US$42.50bn worth of contracts were awarded during the first four months of 2008 leading with US$32.25bn worth of building contracts followed by US$5.7bn worth of infrastructure contracts and US$4.55bn worth of energy contracts.
Imad Al Jamal, Vice-President of UAE Contractors Association, said yesterday the situation is natural. "We are in the middle of the crisis. It is but natural for the number of contracts to drop. Though we are in the middle of the second quarter, the situation is the same. It will continue to remain on the same lines during the remaining two quarters this year. I will be really glad if things improve in 2010. We should not be comparing the figures with 2008 simply because it will take another two to three years for the market to improve and return to 2008 level," he added.
Meanwhile, Mibu John, Syndicated Research Director from Ventures Middle East said of the US$42bn worth of contracts awarded during the first four months of 2008, about 10 per cent has been either put on hold or cancelled.
"Currently the value of ongoing projects awarded to main contractors during the first four months of 2008 amounts to about 37.9bn. Whereby an actual comparison would still give us a drop this year of about 75 per cent," said John.
Industry sources attribute the low numbers for this quarter to a combination of factors caused by the economic slowdown – lack of liquidity, reduced confidence and renegotiation of contracts coupled with an anticipation of a further reduction in the cost of construction.
Jamal agrees liquidity remains the main issue for developers. "Banks are imposing certain tough conditions for loans. Liquidity remains the main cause of crisis. There is also more of a psychological impact on the market," said Jamal.
Moreover, many developers have said that they are delaying the finalisation of new contract awards in order to extract more concessions from contractors. In fact, several developers speaking to this paper during the recent Cityscape in Abu Dhabi had indicated that they are waiting for the construction costs to fall further before awarding the contracts.
For the period from January to April, the total value of contracts for commercial, residential and industrial projects was US$7.6bn, energy projects US$2.35bn and infrastructure US$600m. In 2009, major contracts awarded so far includes the US$1.3bn deal awarded by the Department of Civil Aviation, Dubai, to Al Jaber Engineering and Contracting for the development of Concourse three at the Dubai International Airport.
Other contracts include the US$545million contract for the construction of St Regis Hotel & Residences on Saadiyat Island to Al Habtoor Murray and Roberts; the US$373m contract to SK Engineering & Construction Company by Tamouh Investments at the City of Lights; and the US$327m contract by Al Fajer Properties for a mixed-use development in Jumeirah Lake Towers to Al Ahmadiah Contracting.
According to statistics revealed by Ventures Middle East, total contracts awarded in Abu Dhabi during the first four months amount to US$6.15bn followed by US$4.45bn in Dubai and other emirates.
Experts say infrastructure and government projects could take precedence over private developments across the GCC and in the UAE.
Aidroos Hassan, Executive Chairman of Middle East Foundations told Emirates Business there are visible signs of greater emphasis on infrastructure development by the governments. "We can expect a boost to the construction sector through infrastructure development. That does not mean private developments will totally come to a halt," said Hassan. The company is expecting to tender for new contracts worth several hundred million during 2009, he added.
As reported earlier, the UAE leads the GCC with infrastructure development projects almost worth US$105bn being planned and under construction.
While US$28.5bn worth of projects are currently under construction in the country, another US$76.9bn worth of projects are being planned during the coming decades.
However, contracts awarded from January to April this year show an overall drop of 75 per cent when compared to the same period in 2008. The value of infrastructure contracts awarded this year also fell sharply by almost 89.4 per cent compared to the same period last year.
Almost US$42.50bn worth of contracts were awarded during the first four months of 2008 leading with US$32.25bn worth of building contracts followed by US$5.7bn worth of infrastructure contracts and US$4.55bn worth of energy contracts.
Imad Al Jamal, Vice-President of UAE Contractors Association, said yesterday the situation is natural. "We are in the middle of the crisis. It is but natural for the number of contracts to drop. Though we are in the middle of the second quarter, the situation is the same. It will continue to remain on the same lines during the remaining two quarters this year. I will be really glad if things improve in 2010. We should not be comparing the figures with 2008 simply because it will take another two to three years for the market to improve and return to 2008 level," he added.
Meanwhile, Mibu John, Syndicated Research Director from Ventures Middle East said of the US$42bn worth of contracts awarded during the first four months of 2008, about 10 per cent has been either put on hold or cancelled.
"Currently the value of ongoing projects awarded to main contractors during the first four months of 2008 amounts to about 37.9bn. Whereby an actual comparison would still give us a drop this year of about 75 per cent," said John.
Industry sources attribute the low numbers for this quarter to a combination of factors caused by the economic slowdown – lack of liquidity, reduced confidence and renegotiation of contracts coupled with an anticipation of a further reduction in the cost of construction.
Jamal agrees liquidity remains the main issue for developers. "Banks are imposing certain tough conditions for loans. Liquidity remains the main cause of crisis. There is also more of a psychological impact on the market," said Jamal.
Moreover, many developers have said that they are delaying the finalisation of new contract awards in order to extract more concessions from contractors. In fact, several developers speaking to this paper during the recent Cityscape in Abu Dhabi had indicated that they are waiting for the construction costs to fall further before awarding the contracts.
