What has 2009 meant for MENA construction?

The Burj Dubai: the height of MENA construction?

It has been a year of enormous ups and downs for the Middle East and North Africa construction industry.

In the wake of the worldwide financial depression, some 556 Middle Eastern construction projects had been cancelled or shelved, with the majority of them being in Dubai - an emirate built on its property market. As we all know, this was going to impact the region heavily by the end of the year.

Ups and downs

With so many construction firms hit hard, many of them turned to foreign projects, such as Arabtec's (the contractors behind the Burj Dubai) deal to build Gazprom's Okhta Centre in St. Petersburg.

However, despite the doom and gloom, the sector still saw growth and successes. By August, the UAE had 1,372 building projects under construction or in bidding with a total value of $900 billion. Grand schemes like the Dubai Waterfront, Yas Island in Abu Dhabi and the Saadiyat Island scheme ensured jobs and a source of income for many firms, whilst key projects like the Burj Dubai and the Dubai Metro Rail were completed to much pomp and circumstance.

Not just that, but for one weekend in November, Abu Dhabi held the world's gaze as it hosted the debut of its Yas Marina Circuit for the F1 Grand Prix. With over US$1 billion spent on it, 25 million man-hours put in and 140,000 cubic metres of concrete utilised, The Yas Marina Circuit was dubbed as one of the grandest F1 tracks the sport has ever seen.

Yet there were still concerns, and many wondered whether the region's construction industry would ever return to its 2008 peak. It was hoped that the Big 5 Exhibition would stimulate growth, despite a hoard of projects in the pipeline estimated to total USD$3.1 trillion, but then the unthinkable happened...

The Dubai debt crisis

When it was announced that Dubai's flagship company Dubai World, and its subsidiary Nakheel, needed government help to pay their debts, share markets dropped all over the world. Compared to its oil-rich neighbour Abu Dhabi, Dubai's wealth comes from its property investment market... which in recent years, had been less than stable.

There were concerns that Abu Dhabi would not aid its neighbour, instead positioning itself to take advantage of its misfortune however this week saw the emirate lend Dubai USD$10 billion to help with its debts.

It's reasons were unclear but could range from stabilising the markets and the regions, to simply putting itself in a position to secure Dubai's more premium assets.

The future?

So what does this mean for the region in 2010?

According to Dubai's ruler Sheikh Mohammed bin Rashid Al Maktoum, "big goals will remain (Dubai's) objectives". Speaking at the beginning of December, Sheikh al Maktoum said, "We will receive tomorrow a new federal year rallying around our leadership, becoming more certain of its vision and approach, more unified, integrated and dignified of our union and more proud of our country, more confident of ourselves, more experienced of our world, more capable to face challenges and overcome difficulties and more faithful about that there is no distant goal that we can't reach and sublime position that we can't conquer."

"Ambitions will remain the ally of our plans, big goals will remain our objectives, nobility of our nation and welfare of the citizens will remain the compass that guides us and orientates our work."

However others aren't so sure. Khaldoun Tabari, vice chairman and CEO of Dubai-based engineering contractor Drake & Scull International, believes that the debt crisis has, for all intents and purposes, killed the construction industry in Dubai and that it has no chance of recovery in 2010.

"If you are 100 percent in Dubai with nothing outside you are dead," he stated to Arabian Business last week.

"What does it mean if you are dead? If you are a construction company and you pay 10,000 or 20,000 people, and you do not get any work because there's an abundant supply of buildings, you are going to be bankrupt."

Despite Tabari's indictment of Dubai's construction future, things are bright in other areas of the UAE - Super-skyscrapers are still being built, Abu Dhabi is planning mega-sports stadiums for their World Cup Bid as well as transforming their entire infrastructure to make the emirate a global business hub.

While Dubai may be out of the game for the next few months, the rest of the region's future seems very bright.

Relevant articles:

Qatar's $23bn rail project | How will the Dubai crisis affect UAE growth? | The cost of Gulf construction

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