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United Arab Emirates Infrastructure Report Q4 2011
Business Monitor International, Oct 2011, Pages: 84
Business Monitor International's United Arab Emirates Infrastructure Report provides industry professionals and strategists, corporate analysts, government departments and regulatory bodies with independent forecasts and competitive intelligence on United Arab Emirates Infrastructure's industry.
BMI View:
New data that have come to light indicate that the UAE has assumed the position of the largest construction market in the region by industry value. While the historic and forecasted industry value has consequently changed, growth trends remain in place. BMI anticipates a moderation in growth from 2011 onward, and BMI does not forecast the double-digit growth of the construction boom years to return.
Since 2009, Abu Dhabi has been - and BMi anticipates that will continue to be - the driver of industry value growth, accounting for the majority of construction industry value in the UAE.
The construction and infrastructure market in the UAE remains stagnant, with public investments driving activity, and picking up some of the slack left behind from the real estate slowdown.
Key Highlights:
- The energy and utilities sector is perhaps the strongest performer, as industrial users ramp up their capacity. The most recent example at time of writing is the EPC contract awarded to South Korea's Samsung C&T for the construction of a US$580mn thermal power plant for Emirates Aluminium. According to BMI's Key Projects Database, nearly US$60bn of utilities projects (including the nuclear power plant) are underway, or are planned in the UAE.
- The transport projects pipeline has been leaner over the previous quarter. The construction contract for the Etihad Railway (formerly known as the Union Railway) will be the main event of 2011 in the sector.
- The Mafraq-Ghweifat highway public private partnership (PPP) hangs in the balance at time of writing, with reports in MEED that the government of Abu Dhabi is considering alternative procurement methods. This is the first PPP of its kind in the UAE, and the cancellation could be a blow for the prospects of major transport PPPs.
- Data and estimates on the value of projects cancelled continue to surface. Citigroup estimates that since the beginning of 2009 to August 2011, a total of US$170bn of projects have been cancelled and delayed in the UAE, the majority of which have been in the real estate sector.
Risk/Reward Score:
The UAE's Risk/Reward score in BMI's Middle East Business Environment Ratings remains favourable, despite a fall in the score for Industry Rewards, following the downgrade in forecasts.
On a structural level, the development of the emirates' infrastructure has left a highly positive legacy, having promoted sophisticated local players and a voraciously competitive base, ripe for development, a factor that is quantified by extremely strong scores for the Industry Risks category.
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