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Construction and Architecture

The impressive population growth and increasing amount of tourists to the UAE displays great opportunities for companies operating within construction, real estate and architecture. In 2014 the construction sector experienced a growth of 5.5% compared to 2013, and the sector is projected to grow 6.5% in the forthcomming four years towards EXPO 2020 

From slowdown to real growth
The UAE experienced a dramatic slowdown after the 2008 global financial crisis. Many development projects came to a complete stop, real estate prices dropped and the average real growth went from 15.8%, in the four years prior to the crash, to 0.9% average real growth for the subsequent four years. However, 2013 saw an increased confidence in the market with a huge amount of activity in terms of project awards and announcements. According to Business Monitor International (BMI, Infrastructure Report, Q1 2014) the construction activity in the UAE is set to grow significantly over the coming years due to projects worth more than USD 200bn already in the construction phase. BMI forecasts a real annual growth rate of 5.3% in 2014 and estimates an average annual growth rate of 6.5% in the years 2015-2019. It is forecasted, that the average real growth rates will drop to 2.9% per annum between 2020 and 2023 (BMI, Infrastructure Trend Analysis, 2014). 

Mega Projects
A number of mega projects are well under way in UAE and especially in Dubai, where the planning of the new Mohammed Bin Rashid City with a price tag of GBP 1.7bn and the Al Habtoor City with the price tag of USD 3bn are in progress. The planning of the Mohammed Bin Rashid City includes a mega development complex with the world's biggest shopping mall, 100 hotels and five theme parks. When completed the Al Habtoor City will include more than 3,000 hotel and residential units, three internationally branded hotels, a water-themed entertainment park, three residential tower blocks with luxury apartments and penthouses, a tennis academy and a French-style landscaped garden (BMI, Infrastructure Report, Q1 2014).

Other recent announcements of mega projects include plans to build a huge integrated urban center and golf destination in the aerotropolis of Dubai World Central, the second and newly opened airport in Dubai. The development will include a golf-course villa community, several hotels, a high-end shopping mall and leisure attractions. It has also been stated that Nakheel’s The World Islands project will be fast-tracked to be ready in time for the Expo. 

Expo 2020: Growth in construction sector 
The awarding of Expo 2020 in Dubai is a catalyst for growth in the construction industry. The Expo 2020 will focus around a planned 438-hectare site, the largest ever created for a World Expo. The site for the Expo is located in Jebel Ali near the new Al Maktoom Airport. The master plan for the site will not receive approval until the end of 2015, but the construction work is expected to commence shortly afterwards and be completed for 2019. According to BMI an estimated USD 6.9bn are earmarked for infrastructure projects to facilitate the event. Given the full governmental backing of the project, there are only a few risks to its realisation. In light of this investment, and the broader positive effects hosting the Expo will have on the UAE's economy, the prospect for the future looks very positive (BMI, Infrastructure Report, Q1 2014).

Renewable energy focus creates opportunities
The continuously increasing focus on renewable energy in UAE is also creating opportunities in the construction sector. The first phase of a 100-megawatt solar plant was inaugurated in March 2013 and in August 2013 Dubai Electricity and Water Authority (DEWA) launched a tender for the construction of a new 1,200MW coal-fired power plant. Furthermore, plans to deploy carbon capture and storage technology are in progress, which could be used in Enhanced Oil Recovery (BMI, Infrastructure Report, Q1 2014).

The alternative energy sector within construction and architecture is subject to strong growth, which creates lucrative opportunities for Danish companies. The demand for efficient and sustainable solutions is a field, where Danish expertise are a great opportunity.  

Head of Commercial Section

Mrs. Astrid Svitzer Ching Nielsen

+971 50 652 8620

asthan@um.dk

 

Commercial Advisor

ICT/Digitalisation/Smart Cities

Mr. Ilias Ghiyati

+971 56 644 0266

ilighi@um.dk