52% of UAE's construction projects suspended

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PROJECT DOUBTS: More than half of the construction projects in the UAE have been suspended, according to Proleads. (Getty Images)

The future of more than half of the UAE’s 1,289 construction projects hangs in the balance, a new report has revealed.

Nearly 53 percent of the UAE’s development portfolio, worth a combined $582bn, has been suspended as the construction industry grapples with the country’s dramatic real estate crash.

The findings by Dubai-based market research firm Proleads show that of a $1.3 trillion-strong industry, only $698bn is still in operation on active construction projects.

The report, which reviews the real estate, leisure and entertainment and infrastructure sectors, shows the real estate market to be the worst hit.

Some 180 projects have been suspended while projected cash flow, the marker of the industry’s health, is set to drop 43 percent in the first quarter of 2009, the report noted.

Real estate comprises around 74 percent of the UAE’s construction portfolio.

While the numbers are daunting, Emil Rademeyer, director at Proleads, said the report also offers glimmers of hope.

Based on past data explored in the report, the majority of the projects are likely to resume at some point, creating a “dormant opportunity” for contractors able to ride out the economic storm, he said.

“There are delayed opportunities in terms of the suspended contracts. The money involved - and it is billions and billions of dollars - is still there.

“Though the negative numbers are daunting, we should still focus on the glass being half full. There is still close to $700bn worth of projects on the table, and not many countries in the world can say that during times like these.”

For a full analysis of the report, see next week's issue of Arabian Business magazine.

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READERS' COMMENTS

Speculation or Investment
Posted by Ametis, Dubai, UAE on Saturday 7 February 2009 at 10:15 UAE time


I think that many have confused speculation with investment.
Speculators who bought on the ground floor in the early days have made their money and if sensible moved on..

The Property Hype was fueled by speculation, sadly this was not just in Dubai, but also in USA where people who could ill afford the property were given high mortgages....

In Dubai those that worshiped the temple of eternal wealth borrowed money jumped on the gravy train.....

That Gravy train has derailed...

The market is now ready for serious business............

What the government needs to do to curb speculators is to introduce Tax of 65% on sale of any second property, first property being tax free...

Same system as is available in UK and other countries....

why are the fireworks still on?
Posted by worried on Friday 6 February 2009 at 22:05 UAE time


Why is good money being squandered in such a display. Could this money not be put to better use? Im sure readers will be able to come up with thousand ways to put this "up in smoke " money to some much better use. This mus t be stopped with immediate effect unless there is some really good reason to hve the fireworks go on.

Doing the maths
Posted by No Einstein on Friday 6 February 2009 at 13:18 UAE time

If "Nearly 53 percent of the UAE’s development portfolio, worth a combined $582bn, has been suspended", yet "Dubai-based market research firm Proleads show that of a $1.3 trillion-strong industry, only $698bn is still in operation on active construction projects" how does $582bn suddenly become "nearly 53 percent"?

I am no mathematical genius, but isn't $582bn a smaller number than $698bn?

Speculators are gone but speculations remain
Posted by Ganesh, Dubai, UAE on Friday 6 February 2009 at 12:15 UAE time


Hi,

The good news is the traffic within and inter-Emirates is slowly improving but has to go a long way. The effects of global crisis on local life is yet to be felt looking at the way traffic moves, search for parking continues in residential areas and above all the rents are revised upwardly by landlords citing the Rental Index. Unless the situation is affected there won't be a difference felt. Recently the Modern School increased the school fee by 90% and all parents protested. These are the indicators that the economy is going positive for the ones who have money and those who cannot afford are supposed to leave the country. All the speculations that Q2-2009 will be the realistic one seems to be funny because everyone here is looking at increasing price of basic necessities - food, shelter, school, healthcare etc.

Best is to wait for next 3 months as someone said if the economy does not start stabilizing in 6 months then it is going in negative direction and recession can be expected after that.

Ganesh

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