Construction

UAE construction market posts substantial increase in total project awards despite COVID-19 pandemic

Total project awards in 2020 reached $66.4bn to date, compared to $57.2bn last year

Although it has been a difficult year for the UAE construction market due to the COVID-19 pandemic, the projects market has posted a substantial increase in total project awards in 2020, to just over $66.4 billion from $57.2 billion the previous year, a leading expert has said.

Dr Deva Palanisamy, vice president – Project Intelligence for ProTenders, the Dubai-based construction intelligence and e-Tendering platform, told Big Project ME that in the absence of a vibrant urban construction sector, contractors and consultants have started to look to the government infrastructure sector as a source of new project opportunities.

“Water, power, road transport and infrastructure are taking on a greater significance as companies seek to win a smaller pool of new business opportunities,” she says. “A total of 18169 projects (including ones on hold) were active in the region. New projects worth $15.2 billion were announced during the first three quarters,” Palanisamy adds.

The UAE urban sector $29.9 billion has registered the highest contractor awards in 2020m followed by the energy and Infrastructure sector with $26.2 billion and oil and gas with $11.7 billion, she says.

“The projects in the design stage have been slowed down rather than put on hold and no real decisions are being made at the moment to move forward with any new projects. New projects will only be awarded if developers slash the original cost-to-build estimates,” Palanisamy explains.

“UAE contractors will have to go through the whole price negotiation process again and sign the re-pricing contracts because of the current pandemic circumstances. Even projects that were awarded as recently are being put through re-pricing.”

However, she points out that some sectors like water and renewable energy are growing. Oil and gas spending in Abu Dhabi is also forecast to increase over the coming year.

“Although there are undoubtable challenges in the short term due to COVID-19 and a slump in oil prices, the long-term scenario is still relatively healthy. Regardless of what happens, the UAE market will remain one of the largest construction markets in the MENA region,” Palanisamy concludes.

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