Construction Sector Hard at Work

Economic News

22 Jul 2010
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While the debate continues on what may or may not be the benefits to the UAE economy of reconstruction in Iraq, there has been plenty of construction going on much closer to home. With grandiose projects in tourism, transport, housing, health care and warehousing, the Emirates are turning into a gigantic building site, with one leisure complex even attempting to recreate the entire planet in miniature.

The World is a holiday resort composed of a group of islands representing the seven continents. It is currently being constructed by a Dutch dredging and marine contractor, Van Oord ACZ, which won the Dh850m contract at the start of August from the site developer, Nakheel. The ambitious project will take two years to complete and involves the shifting of some 125m cubic metres of sand and 13m tons of rock.

Nakheel is the same company behind another huge tourism development project, the two Palm Islands, which are similarly artificial offshore islands designed to raise Dubai's tourism profile exponentially. Van Oord is also doing the dredging work there.

Meanwhile, over in Abu Dhabi, the start of September saw a decree issued by His Highness Sheikh Khalifa bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, which gave birth to a company which will oversee the development of another offshore project, Lulu island.

The General Corporation for Development and Investment of Lulu Island has a capital of Dh100m, to be paid by the Abu Dhabi government. Industry insiders told Gulf News September 2 that eventually, billions of dhirams were likely to be sunk into the project, which will eventually include a Disneyland-style fun city, hotels and restaurants, a wildlife reserve and other facilities. The Corporation is also exempt from all taxes and customs tariffs incurred during the project, as are any subcontractors brought in to help out.

At the same time, work is also underway to expand the city's seaside road with the aim of turning it into a major hotel strip - starting with the USD200m Conference Palace Hotel, due to be completed next year.

Finding a hotel room may therefore be much easier in a few years time in the UAE. Tourist development is a major lynchpin of government policy these days, and a useful boon for the construction sector. In addition, currently, the Ministry of Public Works and Housing has around Dh240m of construction projects at the planning stage aimed at healthcare, government facility and mosque building. The ministry is studying plans for an expansion in the number of hospitals, along with specialist clinics and departments, with the Dh80m Kalba hospital on the east coast of Abu Dhabi the star attraction.

Back in Dubai, tenders are currently out for a major transportation project - the Dh500-600m Dubai-Fujairah Freeway. This 80km expressway is also aimed at attracting more tourists, as it will cut down travel times to Fujairah. Road building is also being seen as a major area for improvement, with Ahmed Humaid Al Tayer, Minister of Communications and Acting Minister for Public Works and Housing, recently telling reporters that the ministry was keen to develop the federal road network. He also said the ministry was looking to construct an alternative highway to the existing one connecting Sharjah with Ras Al Khaimah. The ministry is also set to begin work on the existing Umm Al Quwain-Falaj Al Mulla Road in the Al Surrah area, which will end in Al Rifaa, connecting Sharjah with Ras Al Khaimah. The total cost of the road is projected at Dh149m and should be completed by 2005.

Dubai municipality is also now on schedule to start work in November on one of the longest and widest tunnels in the Middle East. This forms part of the new Dh686m road network around Dubai International Airport.

When completed, this may make it easier for visitors to head for a number of new government buildings, the contracts for which were also awarded at the start of September by the Emirates Real Estate Corporation.

The four new buildings are to house the Ministry of Electricity and Water, the Ministry of Justice and Islamic Affairs and Awqaf, the Ministry of Agriculture and Fisheries and the General Secretariat for the Federal National Council in Dubai.

Taken as a whole, this stream of construction projects represents a major new investment in the UAE's infrastructure and urban fabric. Some sector analysts see this as a consequence of the Emirates cash-rich position following high oil prices prior to the Iraq war, a windfall for all oil producing countries that benefited major producers such as the UAE especially.

However, the projects also represent an ongoing policy in the Emirates to try and diversify economically, with tourism seen as having major potential for this. Many of the other construction projects therefore have a tourism spin off by improving the local infrastructure overall.

With many in the Arab world shifting holiday destinations to places closer to home in the current political climate, the move may pay off if this change solidifies. Meanwhile, many sector observers say the Emirates' attractiveness to visitors from South Asia and the Far East is also continuing to strengthen. As the dredgers and builders go to work, there are plenty of hopes that this will translate into significant future profits.

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