Dubai shows signs of rationalisation as Expo takes centre stage

05 March 2017

Schedules are starting to slip for projects that are not critical for 2020

Dubai’s construction market has been eagerly waiting for more than three years for the first large building contract to be awarded at the Expo 2020 site.

On 2 March, the wait ended when Dubai Expo 2020 announced that the local/UK Al-Futtaim Carillion will be the main contractor for the AED2.2bn ($599m) deal to build the three Theme Districts.

The deal, which involves building a basement and the main exhibition platform for the Expo, is one of the largest construction packages for the scheme, and signals that after several years of preparation, construction work for the Expo will start in earnest in 2017.

With more than $3bn of construction contracts due to be awarded for the event, the project will help underpin Dubai’s construction sector and prevent it from suffering from the low oil price-induced recession that has affected other markets in the GCC.

A more interesting question is: how will the focus on work for the Expo affect other projects in Dubai? There have already been signs that a quiet rationalisation is taking place, with the schedule for schemes that are not considered Expo-critical slipping away.

If this decision has been made, it may have been to spare resources for work on the Expo site, but a more likely explanation in a region where liquidity is tight is that any funding Dubai may have at its disposal has to be targeted towards projects that are critical.

For the construction sector, this means Dubai will be a difficult market to call in 2017. For some companies that are targeting projects that are going ahead, the prospects will be good. For those that are frustrated as schedules slip and tenders are cancelled, the market will veer towards disappointment.

That might not be the unanimously positive story the market expected back when Dubai secured the Expo in late 2013, but it may not be such a bad thing when compared to markets that are offering little opportunity for anyone in 2017.

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