Countries - UAE

New Emirati Projects Expand the Infrastructure Growth

November 2017

Countries - UAE

New Emirati Projects Expand the Infrastructure Growth

November 2017
Coming to infrastructure investments, the Middle East region is one of the fastest growing region globally headed by 2 main countries, Qatar- hosting FIFA 2022, and UAE - hosting 2020 Dubai expo event. In fact, the UAE infrastructure is the most advanced in the GCC region with well integrated transport systems and assembly of iconic structures. In 2015, as reported by World Economic Forum - Global competitiveness report, UAE infrastructure ranking stood at 17th position on grounds of highly developed infrastructure with great macroeconomic environment and resilient institutions. UAE has been the most attractive destination from an investment standpoint, according to PR Newswire.

While offering huge opportunities, the country due to an open business environment, has also been a preferred route for international companies entering or planning to enter the Middle East market. In real terms, the UAE construction industry posted positive growth during the review period (2012-2016). Construction activity experienced a slight slowdown during 2015, owing to the impact of low oil prices. In addition, economic slowdown in China weighed on the UAE's economic performance, according to Timetric. Despite modest economic growth, the country's construction industry registered a positive growth during the review period, driven by the government's investments in transport, residential and commercial infrastructure projects. The industry is expected to expand over the forecast period (2017-2021), driven by positive developments in regional economic conditions and subsequent improvements in investor confidence. Moreover, the government's various large-scale investments in transport and commercial infrastructure projects on the back of the upcoming 'World Expo 2020' will be a major driver for the industry's growth over the forecast period. In fact, post the announcement of Dubai 2020 expo event, the emirate is a wave of opportunity with Government setting aside USD4.6 billion in 2016 budget for infrastructure development till 2020. The investment will spread over different asset classes broadly covering housing, roads, railways, schools, health facilities and public buildings. Simultaneously, Abu Dhabi is the next destination for investors eyeing long term growth. The emirate has earmarked USD100 billion to be invested till 2030 and majority of it will be ploughed in real estate and transportation sector. The industry's output value in real terms increased at a compound annual growth rate (CAGR) of 4.38% during the review period, and is expected to post a CAGR of 4.68% over the forecast period. Moreover, the government's plans to diversify from an oil-dependent economy, while focusing on growth in non-oil sectors, are expected to drive investment in the construction industry over the forecast period. And in a bid to represent Dubai as a global hub for renewable energy, in November 2015 the government launched the Dubai Clean Energy Strategy 2050. The strategy under which the government announced its plans to invest US$27.2 billion in a green fund so as to encourage investments in renewable energy projects.in addition, in September 2016, Dubai Holding launched the Jumeirah Central project, which involves the development of a new city district across 4.4 million m2 of gross floor area in Dubai. With a total investment of USD19.9 billion, the project includes the construction of over 278 buildings, consisting of 11,000 housing units, retail units spread across an 845,417.6 m2 area, office facilities across a 743,224.3 m2 area and 7,200 hotel rooms. Chemaweyaat, the National Chemicals Company of Abu Dhabi, is also developing a large-scale project called the Tacaamol-Al Gharbia Chemical Industrial City in Taweelah, Al Gharbia. This project involves a total investment of US$20.0 billion, and is expected to be implemented in three phases. According to the World Economic Forum's Global Competitiveness Report 2016-2017, the UAE ranks fourth out of 138 countries, in terms of the quality of overall infrastructure. Moreover, the country retained its leading position secured in the previous year, in terms of the quality of road, air and port transport infrastructure. All of this played a huge role in maintaining a strong construction sector and secure a growth during the year to follow.