Abu Dhabi ends speculation with project approvals

26 January 2012

Sentiment in the capital worsened in 2011 as contract awards dipped

Abu Dhabi’s Executive Council has approved a number of construction and development schemes planned for the emirate ending speculation that some of its largest projects could be cancelled.

The approvals mean projects now have government backing, although doubts over when projects will start and whether the approved budgets are realistic, remain.

The council says it has approved major projects such as the infrastructure at the new port and industrial zone at Taweelah and the midfield terminal at Abu Dhabi International airport, together with new roads, hospitals, and housing.

Abu Dhabi construction sector
YearContract awards ($bn)
Source: MEED Projects

It also approved the budget for more consultancy work to be done on the capital’s proposed metro and tram networks, and a budget and delivery dates for the new museums planned for Saadiyat Island.

The approvals should ease growing uncertainty about the future of Abu Dhabi as a construction market. In 2011, $8.6bn of construction and infrastructure contract awards were made in the emirate, down 44 per cent from $15.5bn in 2010, according to regional projects tracker MEED Projects.

The decline in the total value of awards has raised questions about whether the government is still committed to major projects such as the midfield terminal and the metro. “No one knew what the government was committed to last year,” says a consultant working in Abu Dhabi. “It seemed like everything was on hold.”

The slowdown was made more frustrating as many contracts were tendered, but not awarded. “We tendered a lot of work in Abu Dhabi during the year [2011], we are still waiting to hear whether they will be awarded,” says UK-based contractor.

The move by the executive council has not completely restored confidence in the market as it did not approve the award of new contracts such as main construction deal for the Louvre, which contractors have been expecting since early last year.

“The approvals are a positive for sentiment, but they fall short of actual awards and that is what everyone is waiting for,” says the regional director of an international contractor. “I would say Abu Dhabi will still be slow, but at least we now know that the big projects aren’t cancelled.”

If Abu Dhabi awards all the contracts that is expected make this year, it will be one of the busiest construction markets in the region. Contractors are currently tendering or prequalifying for $19bn-worth of construction and infrastructure deals that should be awarded by the end of this year.

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