Despite the 'double dip recession' scenarios being played out in the international markets, more than USD 67 billion worth of projects have been revived in the GCC in 2011, according to a Sharjah-based project tracker firm.
"These figures are totaled on the estimated project values. In the GCC, projects with a combined value of USD 29 billion are already under construction with Dubai alone accounting for over 30% of the revived projects," said Ben D'Souza, Chief Operating Officer at BNC Networks, an independent project tracker research firm , which compiled the data exclusively for Zawya.
In the UAE alone, projects totaling USD 19 billion have been revived in 2011 (of which around USD 14 billion worth of projects are already under construction). "In Dubai, USD 13 billion worth of projects were revived this year, of which more than USD 10 billion worth are already under construction," said D'Souza.
Of the revived projects, over USD 6 billion are currently in the tender stage in GCC. The UAE's share is close to USD 2.5 billion and Dubai covers more than 70% of the value. "Abu Dhabi did not have as many projects going on hold and hence their share of revived projects is quite low," he explained.
When it comes to revived projects being revisited in terms of design, the numbers change. "Kuwait has the major chunk with as much as USD 11 billion worth of projects being redesigned. This works out to over 40% of the GCC total figures for projects that have been revived and being revisited at the drawing board," said D'Souza.
One of the the major projects to be revived in 2011 is the USD 5 billion Al Mahaba Causeway; also known as Qatar-Bahrain Causeway/The Friendship Bridge. Once completed, this 40 kilometer long bridge will connect Qatar to Bahrain and will also connect to Saudi Arabia via the King Fahd Causeway.
In August, Dubai property developer Nakheel Nakheel announced an AED 4.8 billion sukuk to its trade creditors to be listed on Nasdaq Dubai and announced that it expected to soon announce new construction contracts. It also announced plans to deliver 7,982 homes in nine developments across Dubai in the 12 months ending December 2012. It is a fact that the industry has started witnessing a revisitation of stalled projects by developers, especially the big ones, added Mibu John, Syndicated Research Director at Ventures Middle East, another project tracking research firm based in Abu Dhabi.
"They are re-evaluating their strategies and the project list includes Nakheel Nakheel , Dubailand, the Kingdom Tower and Madinat Al Hareer as some of the major projects that are back in the limelight," John said.
UAE contractors are also in consensus on the witnessing of green shoots in the market. "There are some projects that are being retendered or restarted in the GCC. But in each country, you will see a revival or announcement in a different sector. In Saudi, it is more infrastructure than residential. In Dubai, it has been mainly infrastructure while certain projects are picking up in the residential sector. In Abu Dhabi, it is a combination of both. But then again, it is the oil and gas sector that is really growing. As for Qatar, it will need a massive supply of residential, commercial projects and infrastructure and logistics to cater before, during and after the 2022 World Cup," said Ziad Makhzoumi, Chief Financial Officer at Arabtec Holding, the UAE's biggest construction company by market value.
"We are looking for more work in all these markets. As for Dubai, it is now becoming a regular economy, which is growing at a reasonable pace when you consider what is happening in the rest of the world; but at a single-digit pace," Makhzoumi said.
Collections have improved tremendously since last year for Arabtec. "All the agreements made last year are being honored. On the funding front, since the volume of projects have dropped drastically, banks are now eager to fund. If developers are awarding contracts to us, they must have arranged the funding. So indirectly, I assume that funding in the market has eased," he told Zawya.
After a gap of three years, banks are showing signs of easing up, agreed Bishoy Azmi, Chief Executive at Al Shafar General Contracting, one of the leading contractors in the UAE. "I think the developers have sorted out their issues - hence old projects are being revived. At the same time, one is seeing new projects in the market. On the financing front, banks are now more confident and coming back to the construction and real estate sector after a gap of three years. Definitely, Saudi is bullish in terms of projects."
Azmi said that after adopting a conservative wait and watch policy, the market is more confident about companies that have survived the crises. "Banks now have excess liquidity and they want to spend. Yes, there are positive indications in the market."
Phillipe Dessoy, General Manager of Six Construct, agreed that certain projects that were on hold or suspended have been restarted. "We can see some activity in construction in Dubai. In Abu Dhabi, there is still good activity in oil and gas sector. But the commercial sector is little slow," he said.
The company has just been awarded an AED 2 billion contract for the Yas Mall from Aldar to build a 235,000 square meter shopping mall on Yas Island. Six Construct, a subsidiary of the Besix Group in which Orascom Construction Industries holds a 50% stake, won the five-year contract that will see the company develop Yas Mall, part of Aldar's 1.2 million square meter plot on the island.
"In Qatar, for the time being, there is a lot of work being given to consultants. But that has not yet trickled down to the contractors. We expect that to happen next year. But we have plenty of work in Saudi and have just been awarded the contract for the stadium in the King Abdullah Sports City," Dessoy told Zawya.
Architectural practices too are seeing the winds of change. "Of course, we were affected by the downturn but we were one of the luckier firms to survive in the market. We have got projects in Iraq, Qatar and Saudi. There has been a revival of projects, redesign and continuation of projects around the GCC in the last three to four months. We have also seen an announcement of some new projects and a revival of some existing projects by Nakheel Nakheel , Meraas and some others in Dubai, a place where everyone said work is finished," said Ammar Al Assam, Executive Director at Dewan Architects, a regional architectural and engineering design firm with offices in the UAE, Saudi Arabia, Iraq and Qatar.
"In terms of redesign too, there is a change. It is now all about the function of the building and cost-efficiency. We have been given some buildings, which have to be completely redesigned in the last few months to make more functional. The project is in Abu Dhabi and was tendered but when the client got the prices, they realized that certain changes could be made. Also, Abu Dhabi has the pre-requisite Estidama green building codes and it is forcing architects, engineers and developers to rethink the energy efficient aspects of the building as well as the optimum and right usage of materials. This is good for UAE since it is known to have a high carbon footprint."
Meanwhile, in September, media reports said that Kuwait has announced over 1,100 projects with a joint value of about USD 125 billion to be completed over the next 20 years. The projects include an overhaul of the district of Silk City, Subbiya, north of Kuwait City, which is worth an estimated USD 77 billion. The new business district will include its own metro and railway system.
"The city will span 250 square kilometers and will include 30 communities including a finance city, an entertainment city, an ecological city, and an educational and cultural city," according to the government statement. When contacted, a spokesperson for the architectural practice Civic Arts refused to elaborate. "Having delivered our concept design and masterplan, the future of the scheme now rests with the Kuwaiti government, and they would be the best people to contact about the timetable for the development," he said in an emailed statement.
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