UAE MAKES UP 38% OF PROJECTS IN GCC FOR H1

▶ Value of total projects awarded to UAE amounted to US$21.3 billion

The UAE accounts for about 38 per cent of the value for projects awarded in the GCC in the first half of the year, even as the total value of plans in the region fell 19 per cent on the back of lower economic growth, according to Meed Projects.

Projects worth US$56 billion were awarded in the first six months of the year compared to $69bn in the same period last year.

The value of contracts awarded in the UAE was $21.3bn in the period, followed by Saudi Arabia, the region’s biggest economy, at $15.8bn and Kuwait at $6.9bn.

The publication also noted there are signs of an uptick in awards in the second half of the year as economies in the region adjust to lower oil prices.

“Although market performance year-to-date has been sluggish, there have been signs of a pick-up in activity,” says Ed James, the director of content and analysis at MeedProjects.

“The award of more than $5bn worth of EPC [engineering, procurement and construction] contracts on the new Duqm refinery in Oman at the beginning of August, plus a raft of new project announcements in Dubai, and the gradual re-emergence of activity in Saudi Arabia have provided a degree of impetus that points to a strengthening market.”

“There’s no doubt that the past two years have been tough for the projects supply chain as government spending has slowed. But with construction companies now more efficient, the private sector more active and the number of PPP projects growing by the week, there is cause for optimism.”

The UAE’s economy is expected to pick up in the second half of the year as governments spend more money ahead of Dubai hosting the Expo2020, according to economists.

The price of crude has plunged to half of what it was three years ago. Though the glut continues and has been exacerbated by an increase in supply globally, the non-oil economy of the UAE is forecast to expand thanks to a rise in global trade, tourism and investment in infrastructure ahead of the Dubai Expo.

The non-oil economic activities will rebound this year, the IMF said in May. Non-oil GDP is forecast to accelerate by 3.3 per cent this year from 2.7 per cent in 2016, according to the Washington-based organisation.

Abu Dhabi Commercial Bank and Standard Chartered, the London-based emerging market specialist lender, are both forecasting the non-oil economy will grow 3.2 per cent in 2017.

About Dh11bn worth of contracts related to the Expo 2020 are expected to be awarded this year.

Contracts to build the three major pavilions representing Expo 2020’s main themes of sustainability, opportunity and mobility, will be awarded in the fourth quarter of this year, Ahmed Al Katib, the vice president of real estate for the event, said in July.

A tender to build up to 30,000 car parking spaces around the outer elements of the site is also due to be floated by the end of the current quarter.

“Longer term, there is even more reason to be hopeful,” Mr James of Meed said.

“Currently, there are over $2 trillion of known active projects in the pipeline across the GCC according to Meed Projects data. The majority of these are infrastructure schemes that are essential to the future prosperity of the region, job creation and economic diversification. While inevitably not all will come to fruition, we can be confident that there is still a large amount of work to come regardless of the oil price.”