The total value of projects under construction in Dubai equates to $53.6 billion, with a further $337.2 billion in the planning stage. These are significant amounts of investment for most mature economies, but for an emerging market such as Dubai, they are extraordinary figures which provide evidence of Dubai’s ambition to diversify its economy away from oil-centered revenues. In this way we can summarize the new report “The Dubai Construction Pulse” published by Deloitte and MEED Projects, which analyses the construction market across a range of sectors.
Analyzing the data provided in the report, it is evident that the majority of the construction projects currently ongoing in the Emirate are related to residential and hospitality sectors with a 60% of the total value involved while 65% of the planned projects fall within the mixed use developments, most probably because of the EXPO 2020’s requirements.
“Despite regional security concerns and wider macro-economic turbulence, Dubai continues at pace with significant project awards in Q1 2016, including the Palm Gateway Towers, Phase II of the Atlantis Resort and Dubai Creek Harbour to name but three”, said Ben Hughes, director at Deloitte Corporate Finance Limited, regulated by the Dubai International Financial Center.
Previously stalled projects have been resurrected, but new project awards have reduced since 2014-2015 as a result of regional economic uncertainty
The conclusions of the report are particularly interesting and are here below summirized.
“The current concerns relating to low oil prices and diminished market sentiment has clearly had a short term impact. Whilst the ongoing geo-political factors equally have profound effects, the fact that many Governments across the region, not least the Government of Dubai, are continuing to spend on infrastructure and other strategic developments suggests that they foresee the oil price issue and political turmoil as a temporary one.
[…] The mere action of building a project and expecting the demand to be there no longer applies, as the fundamental cost basis for these projects remains volatile and competitive. Focusing on factors such as affordability, differentiation and quality are going to be increasingly important factors, and it is hoped that such considerations will ultimately underpin the rationale for conceiving projects.
Simply constructing the tallest or most unique project no longer provides the impact it once did, so diversifying the offer by promoting a world class standard appears to be the mantra moving forwards.
[…] What is interesting is the connectedness of Dubai as an increasingly “smart city”, and […] Dubai may even mature to the extent that it could surpass some of the more established cities across the world, such as London, Paris or New York, in terms of its level of sophistication and dedication to sustainability, smart city principles and ultimately success in delivering projects that are demand driven and profitable.”