Building boom is now over in Abu Dhabi

09 November 2011

With Abu Dhabi unable to fund major construction projects, firms are doubting their future in the UAE. Developers in Dubai are moving forward with smaller schemes

As Abu Dhabi’s construction market grinds to a halt, it is time to finally call an end to one of the most remarkable periods of building activity in modern history.

Since 2003, the UAE has been a hotbed of construction activity. Although dwarfed in size by China, the emirates, which have a population of just 4.4 million people, witnessed a concentration of building projects that was nothing short of phenomenal. Led by Dubai in 2003, then Abu Dhabi in 2006, developers in the UAE were working on schemes such as Palm Deira, Dubai Waterfront and Arabian Canal in Dubai, and Yas, Reem and Saadiyat islands in Abu Dhabi that would have created homes and jobs for millions of people.

Since the global financial crisis began in 2008, all of these schemes have slowed down, stalled or been put on hold. While Dubai was the first to bear the brunt of the new economic reality three years ago, this year it has become clear that even Abu Dhabi, with its vast hydrocarbon wealth, has finally lost the ability to keep funding major projects.

As projects like the Al-Bateen Wharf East Marina development are put on hold, many construction companies will be starting to question whether there is any future for them in the UAE. The surprising thing is that the answer can now be found in Dubai.

It is now three years since Dubai’s construction market collapsed and, since then, developers have reviewed their projects and are now starting to move ahead with selected schemes. These projects are much smaller in size than the developments that were planned before 2008, but they are viable business propositions for the market today and will be built.

Over the next year, Abu Dhabi will have to make the same transition as its developers review and downsize their plans. Construction companies will have to do the same so that their resources match the market. If they can do that, they will have a future in the UAE.

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