Viewed from the first half of 2008, this year should have been a bumper year for the region’s construction industry. After five years of record growth in Dubai, the regional building boom had spread to the rest of the region.
The other Gulf countries were the first to imitate Dubai’s pace of expansion. Abu Dhabi and Doha were forging ahead with their own Dubai-style waterfront real estate projects, and Saudi Arabia started to develop its own mega-projects with its six economic cities.
Bolstered by solid sales in their home markets, developers were quick to export their successes by launching projects in developing countries where land prices were cheap and fat profits could be made.
North Africa’s year-round sunshine and proximity to Europe made it the favourite destination. The potential was huge, and with multi-billion-dollar budgets, the developers launched projects sized to match their ambition. The problem was they overextended themselves, and as soon as problems started at home, these projects, which were aimed at developing some of the poorest parts of the region, were quickly jettisoned.
Today, billions of dollars worth of contracts planned by Gulf developers in Morocco, Tunisia, Algeria, Libya, Egypt, Syria and Jordan are still to be awarded, and in many cases probably never will as developers in the Gulf struggle to pay their bills, let alone invest in new developments.
As the final quarter of the year approaches, it is now impossible for developers to make the $946bn worth of awards they had planned, which is bad news for the construction industry. For North Africa, the news is even worse: it may never attract such levels of foreign investment again.