Region builds from the ground up even with projects on hold

Nearly 43 per cent of all construction projects in the Arabian Gulf region are on hold as the fallout from the global economic downturn continues to bite.

New figures from Middle East property intelligence website BNC Network show that of the Dh6.2 trillion (US$1.68tn) of construction projects in the region, Dh2.7tn worth of them are on hold.

Such projects make up a greater proportion of the schemes in the region than those at any other stage of construction, the report said.

Researchers found a total of Dh1.8tn of schemes in the region were currently under construction. Projects worth Dh299.1 billion were in the tendering phase, while projects worth Dh459.6bn were in the design phase. In addition, Dh974.3bn worth of projects were in the initial planning and concept phase.

The UAE accounted for the Gulf's largest construction project market - with projects totalling Dh2.5tn by value. Of these, 62 per cent or Dh1.6tn were on hold.

The total value of building projects in Saudi Arabia, the second-largest Gulf construction market, was more than Dh1.7tn. Of these 22.4 per cent or Dh371bn were on hold. This was followed by Kuwait, where the total value of projects reached Dh719bn, including 31.4 per cent or Dh225.9bn worth of projects currently on hold or cancelled.

Qatar, which has won the bid to host the Fifa World Cup in 2022, ranks fourth in the region with a total value of projects exceeding Dh628.1bn. Of these, 40.3 per cent or Dh253.8bn worth are on hold.

"Despite the economic slowdown caused by the global financial crisis in 2008-09, the Gulf region still remains one of the largest construction markets in the world after China, where several large-scale projects are still on track," said Ben D'Souza, the chief operating officer of BNC Network. "This reflects the governments' determination to continue to invest in expanding their infrastructure that will help spur economic growth at a time when Europe and the US economies are struggling amid crisis after crisis."

Meanwhile, the news for retailers hoping to expand into the region is positive.

Figures published today by the building consultancy EC Harris show the Middle East is still the most straightforward emerging market for global retailers to set up shop.

EC Harris ranked Saudi Arabia, Qatar and the UAE the eighth, 11th and 15th easiest markets internationally for international retailers to expand into from a property perspective - far higher than both China and India.

The company measured the world's top 40 countries for developing and leasing retail property by measuring the quality of their transport infrastructure, capability of their construction supply chain and their supporting legal framework.

The report found Middle East markets were particularly well placed to deliver to brands positioned at the luxury end of the market.

"International expansion presents great opportunities for retailers experiencing low growth in their domestic markets. Our report suggests that retailers are able to set up much more easily here than in markets such as China or India," said John Williams, the regional leader for the Middle East at EC Harris. "Successful international expansion is about balancing the desirable with the feasible."

According to the property consultancy Jones Lang LaSalle, the amount of retail space in Abu Dhabi is set to increase by 41 per cent over the next two years, from 1.68 million square metres in the second quarter of this year to 2.37 million sq metres as a series of new shopping centres - including Aldar's 235,000 sq metre Yas Island mega mall - hit the market.