In a survey of regional professionals NCE discovered that although most respondents expect the Middle East market as a whole will grow in 2009, there is less confidence in prospects for Dubai.
This pessimistic outlook was reinforced by further research by MEED Projects that revealed the number of construction contracts awarded across the United Arab Emirates as a whole fell by 85% in 2008.
"Word on the street is that some companies have already gone to the wall and unfinished buildings will stand as tombstones to this period for a long time," said one NCE survey respondent.
A range of factors including borrowing becoming more difficult, fears of an oversupply and prices becoming inflated beyond reasonable levels, have created a downturn in the Dubai real estate market. The property sector is the major driver behind the emirate’s construction activity.
"The predicted scale of the reduction in the volume of work available will lead to substantial price cutting in the construction sector," said Interserve managing director for international business Keith Ridgway. "This, coupled with an inevitable slowdown in payment and, in some cases, non payment, will ultimately lead to bankruptcies. I would also expect a number of developers in Dubai to be unable to meet their commitments to contractors."
But it is not all bad news for the region’s construction sector. Engineers expect growth to remain strong in markets such as Abu Dhabi, Qatar and Saudi Arabia, while governments in the region, including in Dubai, remain committed to infrastructure spending plans worth an estimated £700M.
"For private developers everywhere markets are softening but infrastructure remains bullish," said AECOM chief executive John Dionisio.
• NCE wants to know which construction project you think has been (or will be) most important to the Middle East region and why. Perhaps it is the ambitious Jebel Ali port, or the striking Emirates Towers. Please let us know by emailing email@example.com. Your thoughts will be included in the February Middle East report.