Contractors upbeat despite Dubai real estate warning

Wam

• Optimism at Big 5 conference
• S&P sounds ‘slowdown’ alarm
• Dubai Metro boosts industry

The mood was decidedly upbeat at the Big 5 construction conference in Dubai this week, despite recent warnings that the emirate’s real estate sector will slacken next year.

Dubai residential property prices rose nearly 17 percent year-on-year in the first half of 2023, the fastest pace in nearly a decade.

But a senior S&P Global Ratings analyst last month said prices could drop by as much as 10 percent in the next 12 to 18 months as part of a “cyclical slowdown” or “mild reversal”. 

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Industry pros at the conference did not seem particularly worried about this prediction.

“To the contrary,” said Samer Abu Daqqa, group director of cost control for Engineering Contracting Co.

“There are billions and billions of dollars [being invested]. It’s happening here. It’s happening in Saudi,” he told AGBI on the sideline of Big 5. “We just announced the new metro in Dubai.” 

The emirate’s government unveiled the metro expansion in November, at a cost of AED18 billion ($4.90 billion) and with a 2029 deadline. The move is part of Dubai’s 2040 urban master plan, which seeks to prepare the city for 2.5 million more expected residents by then.

That promise hasn’t escaped the attention of construction players near and far.

Wang Shaofeng, chairman of the Middle East affiliate of China State Construction Engineering Corporation, one of the world’s largest construction companies, said it is looking at expanding business in the UAE as the market is still “booming” and “very profitable”.

Just a couple of weeks ago, CSCEC clinched the largest deal in Dubai since 2017, the AED4.4 billion ($1.2 billion) contract from Wasl for The Island project.

The luxury segment is perhaps the most reliable anchor for Dubai real estate today and going forward, said James Duncan, Middle East director for business development with contractor Hill International. 

“And the Emirates in general have made it very, very easy for people to live and work here,” he said. “I think that will continue to drive demand and I don’t expect it to do anything dramatic in the near future.”

The active public sector-driven market in nearby Abu Dhabi and Saudi Arabia’s unparalleled $1.5 trillion construction push are sure to keep the regional industry busy even in the event of an unlikely slowdown in Dubai, Duncan noted.