The total value of projects under construction in Dubai is worth $53.6 billion, with a further $337.2 billion in the planning stage, a new report said.
These are significant amounts of investment for most mature economies, but for an emerging market such as Dubai, they are extraordinary figures which provide evidence of the UAE emirate’s increasingly diversified economy, said the report titled “The Dubai Construction Pulse”, produced by Deloitte and Meed Projects.
The report analyses the construction market across a range of sectors and offers a year-by-year review of the construction industry – focusing on current activity and future pipeline of projects, thus mapping changes in development volumes by USD spend and contract awards.
Key findings of the report include:
• Residential: The total quantum of current or planned development within the residential sector is estimated to be $66.4 billion (this is categorised by projects either in the execution or the planning stages). Market-wide, residential sales prices in Dubai declined towards the end of the year in 2015 by about 10 per cent. The report predicts that residential sales prices in Dubai may continue to soften further into 2016.
• Hospitality and leisure sector: The total development activity within the hospitality and leisure sector is estimated at $21.2 billion including projects in the execution and planning stages. According to Dubai’s Department of Tourism and Commerce Marketing (DTCM), the emirate’s ambition is to attract 20 million visitors per year by 2020. Growth in international overnight visitors since 2010 averaged 9.2 per cent per year, and if this rate of growth continues, the 20 million target will most likely be met. Deloitte and Meed experts predict that growth may be modest in 2016, with occupancy levels down to about 70 to 75 per cent during the year.
• Retail sector: The total quantum of development within the retail sector is estimated to be $15.33 billion. Retail environments have evolved to integrate wellness, leisure, food and beverage (F&B) and lifestyle to enhance the visitor experience and appeal to wider demographics. The report predicts that growth will be flat during 2016, however Dubai’s status as a leading retail destination globally will remain.
• Commercial sector: The construction activity within the commercial sector is estimated to be worth $9.1 billion. The report predicts that a number of additional projects will be announced during 2016 in prime locations such as Dubai International Financial Centre (DIFC) where there remains a strong demand.
“Despite regional security concerns and wider macro-economic turbulence, Dubai continues at pace with significant project awards in Q1 2016, including the Palm Gateway Towers, Phase II of the Atlantis Resort and Dubai Creek Harbour to name but three,” said Ben Hughes, director at Deloitte Corporate Finance Limited.
“The Dubai construction market is proving resilient in the face of falling oil prices,” says Ed James, director of content and analysis at Meed Projects. “Notable contracts awarded in the first month of 2016, such as the $840-million second phase of the Atlantis Hotel on Palm Jumeirah, Nakheel’s $380-million Palm Gateway Towers, the $370-million ICD Brookfield Place, and Wasl’s $190-million Mandarin Oriental Hotel, show that developers are confident in the market’s long-term prospects. As a result, companies involved in project development can feel quietly optimistic for the year ahead in the emirate, even if activity elsewhere in the region slows down.”
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