BMI Research: Big-ticket commercial projects moving through the construction pipeline to sustain elevated growth
The growth in commercial building projects in the UAE will help the sector to outperform the broader construction sector in 2018 with Abu Dhabi continuing to show strength beyond Expo 2020.
According to analysts BMI Research, the Expo 2020 Dubai and a long-term strategy to diversify the UAE economy away from oil revenues and into higher value add service and tourism industries will stimulate ongoing investment into commercial building projects, particularly in Abu Dhabi.
In its January 2018 Industry Trends Analysis of the UAE construction sector, BMI Research also noted an acceleration “of investment pledges relating to the Expo over the past year as the deadline nears”.
“In November 2017, for example, Cimolai Rimond Middle East, a joint venture between Cimolai and Rimond, secured a deal to construct Al Wasl Plaza in Dubai,” BMI Research stated in the report. “The project is the final major design element of the Expo 2020 site, which will focus around a planned 438ha site, the largest ever created for a World Expo. Located in Jebel Ali, construction at the site is expected to cost between USD2bn and USD4bn. The site will feature 180 purpose built pavilions, an underground service rail network and a photovoltaic solar power canopy capable of producing 50% of the site’s power. Work is expected to be completed for 2019.”
“In the long-term, investment in Abu Dhabi’s commercial building sector will help offset an expected decline following the conclusion of Expo 2020. BMI Research anticipates that Abu Dhabi’s share of the pipeline will grow in the coming years as the government prioritises efforts to expand the emirate’s economic base beyond oil.”
The Abu Dhabi government aims to attract 7.9 million tourists annually by 2030 under the auspices of its Abu Dhabi 2030 Plan, up from 4.4 million in 2016. Furthermore, the Emirate hopes to expand its retail and office space to 4mn and 7.5 million square metres by 2030, respectively, up from 2.5mn and 1.5mn in 2013.
“As such, we are seeing a number of big-ticket commercial projects moving through the construction pipeline that will help sustain elevated growth rates,” explained the BMI Research report. “Given our Oil & Gas Team’s expectation that oil is unlikely to rebound to the higher prices of the last decade and a half, we expect similar projects and investment pledges to accelerate going forward.”