AN OUT­PER­FORMER

Com­mer­cial in­fra­struc­ture will gain pace in the UAE in the com­ing years as eco­nomic diver­si­fi­ca­tion from oil and gas con­tin­ues to grow, ac­cord­ing to re­cent re­port by BMI Re­search

Construction BusinessNews Middle East - - Editor's Pick -

Com­mer­cial in­fra­struc­ture will be the clear out­per­former within the broader con­struc­tion sec­tor of the UAE in the com­ing years, as eco­nomic di­ver­sil­ca­tion gath­ers pace and the var­i­ous emi­rates fo­cus on de­vel­op­ing higher-value ser­vice in­dus­tries.

Ac­cord­ing to a new re­port by BMI Re­search, twin fac­tors will fuel the out­per­for­mance of the UAE'S com­mer­cial build­ing sec­tor in the com­ing years - in the short-term, Expo 2020 will drive com­mer­cial ac­tiv­ity in Dubai, while over the long-term, ef­forts to di­ver­sify rev­enue streams away from oil and into higher value add ser­vice and tourism in­dus­tries will stim­u­late in­vest­ment into com­mer­cial build­ing projects, par­tic­u­larly in Abu Dhabi.

Com­mer­cial in­fra­struc­ture growth will con­tinue to be cen­tred upon Dubai in the short-term, largely due to on­go­ing con­struc­tion ac­tiv­ity as­so­ci­ated with Expo 2020. Though we have longhigh­lighted Expo 2020 as a key cat­a­lyst of higher lev­els of con­struc­tion ac­tiv­ity, the pro­lif­er­a­tion of in­vest­ment pledges re­lat­ing to the Expo has ac­cel­er­ated over the past year as the dead­line nears.

In Novem­ber 2017, for ex­am­ple, Ci­mo­lai Ri­mond Mid­dle East, a joint ven­ture be­tween Ci­mo­lai and Ri­mond, se­cured a deal to con­struct Al Wasl Plaza in Dubai. The project is the lnal ma­jor de­sign el­e­ment of the Expo 2020 site, which will fo­cus around a planned 438ha site, the largest ever cre­ated for a World Expo. Lo­cated in Jebel Ali, con­struc­tion at the site is ex­pected to cost be­tween $2bn to $4bn. The site will fea­ture 180 pur­pose-built pavil­ions, an un­der­ground ser­vice rail net­work, and a pho­to­voltaic so­lar power canopy ca­pa­ble of pro­duc­ing 50% of the site's power. Work is ex­pected to be com­pleted for 2019.

In the long-term, we ex­pect that in­vest­ment in Abu Dhabi's com­mer­cial build­ing sec­tor will help off­set an ex­pected de­cline fol­low­ing the con­clu­sion of Expo 2020. Though we note that Dubai's share of com­mer­cial build­ing value clearly out­strips that of Abu Dhabi at the present time, we an­tic­i­pate that Abu Dhabi's share of the pipe­line will grow in the com­ing years as the gov­ern­ment pri­ori­tises ef­forts to ex­pand the emi­rate's eco­nomic base be­yond oil.

Il­lus­trat­ing Abu Dhabi's am­bi­tions in the com­mer­cial in­fra­struc­ture space, its gov­ern­ment aims to at­tract 7.9mn tourists an­nu­ally by 2030 un­der the aus­pices of its Abu Dhabi 2030 Plan, up from 4.4mn in 2016. Fur­ther­more, the emi­rate hopes to ex­pand its re­tail and oflce space to 400ha and 750ha by 2030, re­spec­tively, up from 250ha and 150ha in 2013.

As such, we are see­ing a num­ber of big-ticket com­mer­cial projects mov­ing through the con­struc­tion pipe­line that will help sus­tain el­e­vated growth rates. Given our oil and gas team's ex­pec­ta­tion that oil is un­likely to re­bound to the higher prices of the last decade and a half, we ex­pect sim­i­lar projects and in­vest­ment pledges to ac­cel­er­ate go­ing for­ward.

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