Infrastructure plans feel pain

08 June 2010

Government infrastructure projects join real estate schemes on hold; infrastructure spending was expected to prop up project market

In 2009, many real estate projects across the Gulf were put on hold or cancelled as the financial crisis hit and developers could no longer afford to build them.

The good news was that Gulf governments were still prepared to spend big on developing infrastructure projects to offset the slowdown.

Now, in 2010, a number of government-funded infrastructure projects have been put on hold, which raises concerns about the future of state-backed projects in region.

It is not surprising Dubai’s estimated $1.1bn Al-Sufouh tram scheme is on hold given the number of projects that are stalled or delayed in the emirate. But news that the estimated $4bn Qatar-Bahrain Causeway is on hold, will be more of a shock. The reasons for the delay are a combination of funding and political issues, but, of greater concern, is that it may be the first of many transport schemes in the region to be put on hold.

Most Gulf states manage to appoint consultants to complete the design stage of the projects, but the problem lies in actually building them.

The GCC currently has a total of about $170bn worth of transport-related projects either under way or planned including airports, ports and railways, according to regional projects tracker MEED Projects.

However, the vast majority of these schemes are years away from construction. Consultants have just started working on Abu Dhabi’s metro and tram projects, which form part of the emirate’s $68bn transport masterplan. And regionally, there have also been delays in the bidding process for some of the other big projects because funding plans are not in place.

If the region’s governments are to support their economies with projects, they need to focus on bridging the existing gap between designing a project and building it. Without this, it likely more projects will end up stalling.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.