Strong start to 2017 for Dubai construction

05 January 2017

A major project launch and contract awards dominate the agenda during first week of the year

The omens for Dubai’s construction market in 2017 were starting to look good at the end of last year.

On 21 December Dubai approved its 2017 budget and the key highlight was a 27 per cent increase in infrastructure spending. In 2016 infrastructure spending was budgeted to be AED6.4bn, ($1.75bn) which implies budgeted spending for 2017 is AED8.1bn - or about 17 per cent of the emirate’s 2017 budget.

The number, while significant, is not a true reflection on the market as Dubai government spending on infrastructure is supported by government-related entities which spend much more than the government each year on construction projects.

On 2 January Vice President and Prime Minister of the UAE and Ruler of Dubai Sheikh Mohammed bin Rashid al-Maktoum launched a new offshore development between the Palm Jumeirah and Dubai Marina known as Dubai Harbour, that will be developed by one of these entities - Meraas.

It will develop the project that will include a number of components that include a 1,400-berth marina as well as a cruise ship port and terminal, a 325,000-square metre shopping mall, an events arena, residential buildings, hotels, offices, retail stores, public services, restaurants and cafes and a 135-metre tall tower known as Dubai Lighthouse. Although no budget figure was released, it did say that it will cover an area of more than 1.86 million square metres, which means it could cost about $3bn to deliver.

Awards have followed. Dubai-listed Dubai Investments said on 3 January that its Dubai Investments Real Estate Company subsidiary has broken ground on its $817m Mirdif Hills project.The local Engineering Contracting Company (ECC) is the contractor for the mixed-use scheme which involves building 1,054 residential units, a four-star hotel with 116 rooms and 128 serviced apartments, and a 230-bed hospital. Dubai Investments says the development covers an area of about 362,000 square metres.

A day later on 4 January, the local/UK Al-Futtaim Carillion (AFC) said it has been awarded the estimated $198m contract to build Phase 1A6 of Dubai World Trade Centre’s One Central development. Phase 1A6 has a built up area of 182,500 square metres and comprises two Grade A office buildings of 12 and 8 storeys. Construction work will start in January 2017 and is scheduled for full completion at the end of 2018.

Other real estate developers are also planning to award contracts. Nakheel chairman Ali Rashid Lootah told MEED at the end of 2016 that the company plans to award more than $2.72bn of construction contracts in 2017 as it moves forward with a series of major building projects. The expected total for 2017 is a significant increase on the $1.6bn of awards made in 2016 and include Deira Islands Mall, the Palm Gateway towers, Jebel Ali Gardens, the Palm 360 tower, and the continued expansion of Ibn Battuta mall.

The most high profile award will be made by Emaar Properties. It is negotiating with bidders for the contract to build  the world’s tallest building at Dubai Creek Habour. Two contracting consortiums submitted offers for the construction work last year and an award is expected during the first quarter of this year.

Headline contract awards will complement the projects launches and as activity starts on site, make a more concrete contribution to the economy.

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