According to regional projects tracker MEED projects, at the start of June there was $1 trillion-worth of construction projects planned or under way in the GCC, showing that despite the global financial crisis the region still offers opportunities for contractors and materials suppliers.
The largest construction market in the region is the UAE, with $457bn of construction projects planned or under way, or 44.4 per cent of the regional total. Despite the collapse of its real estate sector in the wake of the liquidity crisis, Dubai, on paper at least, has the most projects on the cards, with 61 per cent of the total planned or under way in the UAE.
After the UAE, Saudi Arabia is the second-largest construction market, accounting for 26 per cent of projects planned or under way in the GCC. The schemes are worth a combined $274bn. Together with Kuwait, the UAE and Saudi Arabia account for 86 per cent of the region’s construction projects market, while the three other GCC member states represent just 4-6 per cent each.
GCC construction projects market * ($bn)
|*Only includes projects planned or underway|
|Source: MEED Projects|
Most of the largest construction projects by value are mixed-use developments that includes residential, commercial and leisure space. Dubai set the trend in the Gulf for developing projects of this type on a massive scale in 2001, with the unveiling of its iconic Palm Jumeirah offshore development.
Since then a series of multibillion-dollar mixed-use projects have been announced in the region. At present, the two biggest mixed-use projects planned or under way are in Abu Dhabi: The Capital City District and the Yas Island development.
The $40bn Capital City District is being developed by the Abu Dhabi Urban Planning Council to become the new seat of the UAE federal government. On completion, the 49-square-kilometre project will also be home to 370,000 residents, in addition to hundreds of shops and businesses. US design firm Aecom is the project manager for the scheme and construction contracts are set to be awarded later this year.
The local Aldar is behind the $37bn Yas Island development, which comprises entertainment and residential space. The centrepiece of the project is the Formula One race track and hotel, which were completed in 2009.
Each of the GCC states has several major mixed-use projects planned or under way. The largest in Saudi Arabia is the $35bn King Abdullah Economic City (Kaec) project, which includes areas devoted to housing, hotels and resorts, in addition to a central business district, an industrial zone and seaport. It is the first of five economic city developments planned for the kingdom. Upon completion, Kaec is expected to be home to 4-5 million people by 2025, and house more than 2,500 manufacturing firms.
Kuwait is also planning several mixed-use developments of its own, including the City of Silk, Failaka Island and Bubiyan Island developments, although these have been in the pipeline for some time.
Qatar, meanwhile, handed over the first homes on its reclaimed island project The Pearl in 2009. The $14bn mixed-use project is being built by the local United Development Company (UDC) in an area to the north of Doha. The project spans 4 sq km and once completed, it is expected to accommodate 40,000 residents, as well as several hotels and shopping malls. Other mixed-development schemes under way in Qatar include the Lusail and Barwa City developments.
Bahrain is the smallest construction market in the GCC with $41bn of projects, according to MEED Projects. Its largest mixed-use development project is the Water Garden City scheme being planned by the local Albilad Real Estate Company. It will include residential and retail space, offices and hotels. The masterplan for the project was prepared by US architect firm Hok. Land reclamation works for the project are nearly completed and earlier this year a contract was awarded for the construction of a quay wall. Other major mixed-use schemes in Bahrain include the Durrat al-Bahrain and Amwaj island developments and the planned Dilmunia Health resort, which aims to break into the global health tourism market.
The development of mixed-use projects in Oman also forms part of a wider drive to attract investment into the tourism sector. In 2006, Muscat relaxed the property laws that had previously prevented foreigners from owning homes in the sultanate and limited GCC nationals to a maximum of three plots.
Since then, the government has encouraged the construction of integrated tourism complexes, where developers build villas and apartments on the same site as tourist resorts.
The first integrated development to be launched was The Wave, through a joint venture of UAE-based Majid al-Futtaim and the Omani government. The $3bn project located on the Muscat coastline covers an area of 2.2 sq km, and includes 4,000 residential properties, hotels, a marina, golf course and retail facilities. Some 300 residents have already moved into The Wave, and this figure is expected to double by the end of 2010.
Another major development making headway in the sultanate is the Mirbat Beach project on southern coast near Salalah. The project is being executed by the local Dhofar Tourism Company and the first phase was completed with the opening of the Salalah Marriott Resort in December 2009. The second phase involves the construction of 1,500 residential units, including townhouses, villas and apartments, as well as offices and retail space. The project area covers 2 sq km.
The global financial crisis and the subsequent collapse in real estate prices have resulted in construction projects in each of the GCC states being put on hold. According to MEED Projects, $492bn of projects are currently on hold, with 89 per cent of them in the UAE. Not surprisingly, Dubai, which was at the forefront of the 2003-2008 construction boom, is the market with the most projects on hold, worth a combined $298bn.
In contrast to the UAE, which has nearly as many projects by value on hold as planned or under way at $438bn, Saudi Arabia has just $18.5bn of projects shelved.
Most of largest projects on hold are mixed-use schemes. Only time will tell whether they will be revived in the future, or if the trend for major mixed-use projects in the Gulf is fading.
MEED Quality Awards for Projects 2011: Mixed Development Project of the Year
The Mixed Development Project of the Year award is for all combined commercial and residential schemes across the GCC.
Many high-profile projects that include living space with work and leisure facilities have been completed in the past few years.
MEED will reward projects that demonstrate a clear strategy of quality and excellence throughout management and delivery.
Projects that can be nominated for this award include:
- Small, medium and large-scale community developments that include residential areas
- Residential neighbourhoods that also include office space
- Retail and leisure developments that also include residential space
- Towers with the opportunity for mixed-use
Those submitting nominations for a mixed development project should use the official online entry form to supply information on the five factors in the delivery of the project:
- Economic and social feasibility
- Architecture and design
- Construction procurement and project management
- Environmental impact and sustainable development