The scale of the slowdown is enormous. According to regional projects tracker MEED Projects, $190bn worth of Dubai real estate projects are currently on hold, and many more schemes are proceeding only slowly as developers struggle to pay the contractors that are building them.
The biggest problems have been at the state-controlled developers, such as Sama Dubai, Nakheel and Limitless, which cannot move forward with projects because both they and their parent companies are struggling to meet their obligations to banks and bondholders.
But as 2010 approaches, there are signs that the market is beginning to pick up for smaller private sector developers. After a year of evaluating and assessing the market, these developers have reprioritised their projects. This is bad news for contractors working on marginal projects that have been put on hold. But by shedding projects that fail to stack up financially, the best developers can now focus on their core work, and at least some schemes will proceed.
For the contractors working on these latter projects, the decision to speed up work is a welcome change from the termin-ations and suspension notices that have become commonplace over the past year.
But the renewed optimism will be limited. The revitalisation of stalled projects will provide turnover and cash flow, but it is just a short-term phenomenon because the projects that are restarting are the ones that are the most advanced and will be completed in early 2010.
For its real estate project market to recover in the medium to long term, Dubai needs fresh contract awards, and this year there has been just $6.4bn worth of those. That is simply not enough to sustain an industry that enjoyed $30bn worth of contract awards in 2008.