UAE construction growth seen slowing to 13% in '10

FEWER CRANES: Weaker growth is predicted for 2009 and 2010. (Getty Images)

Construction growth rates in the UAE are likely to fall to 13 percent in 2010 from 20 percent in 2008 due to global financial woes, with a cement oversupply seen at the end of 2010, an investment bank said in a report.

Construction growth rates in the UAE are likely to slow to 15 percent in 2009, Al Mal Capital said in the report released on Tuesday.

"We have an overall negative view on the cement sector due to the slowdown of the construction industry, coupled with extensive expansion of clinker and cement capacity in the market," it said.

Clinker is the raw material necessary to produce cement.

"Developers may find it increasingly difficult to fund projects and there could be an increasing number of projects being delayed or postponed," it added.

Al Mal said it expected cement companies exposed to regional equities to write down significant losses on the back of falling markets in the Gulf Arab region over the last three months.

Of the five cement companies covered in the report, Gulf Cement Co and RAK Cement were graded 'market perform' while Union Cement , Arkan Building Materials and National Cement were marked as 'under perform'.

"Within our sector, we feel that the share prices of RAK Cement and Gulf Cement have found a bottom, but still the upsides are limited at 2-3 percent to our 12 month target prices."

The remaining stocks could be affected going forward by the market turmoil, the report said.

Dubai's real estate sector has been hit hard recently as shares tumble, real estate prices fall, construction projects are scaled back and jobs are cut.

Mohamed Alabbar, a Dubai government official and chairman of Emaar Properties said on Monday the emirate will pull back on its building spree in light of the financial crisis. (Reuters)

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READERS' COMMENTS

Problem is not to be constructed but what is constructed already !!
Posted by Hal-Luke Savas, London, United Kingdom on Wednesday 26 November 2008 at 02:29 UAE time

Sir,
The real problem in the Middle East (particularly in UAE) is not the slowdown of construction but how best to care for the buildings that are already constructed!. It is sad to hear the deafening silence on developing best management practices for the existing building stock and this will cause even bigger problems than over-supply of cement in years to come.

Facilities Management (especially the Strategic Facilities Management) of skyscrapers, multi-use buildings, towers, specialised installations et al is not the easiest task in the world and improper management of these can sow the seeds of man-made disasters in years to come.

In my humble view, the slowdown of construction is Middle East is actually a good sign, so that precious time is spent on training and caring, automating and monitoring for those existing buildings and making their life-cycle cost calculations even more attractive for investors (is there any one not liking these words?!).

Having dedicated 30 years to building and caring of buildings take it that these words are straight from the horse's mouth!!

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