UAE Construction Sector Review

November 10, 2020

The year 2020 was supposed to be the start of many things. Most noteworthy would’ve been the Expo 2020 which has been delayed to 2021, due to Covid. This was obviously heart-breaking news for the UAE, especially since earlier this year it was announced that 2020 would’ve been the year of starting a roadmap for the UAE. A roadmap to prepare the UAE for the next 50 years, when it celebrates its centenary in 2071. The year looked bleak right from the start, but the UAE was relentless in keeping itself afloat and not sinking with the emergence of Covid.

The UAE adapted to the current situation faster than most. Throughout the year, billions of dollars’ worth of stimulus packages have been announced to support the economy as well as companies and individuals. The different emirates released announcements of their plans for the year. In Sharjah, the emirate’s budget will increase 2% year-on-year to reach $7.9bn (AED29.1bn) in 2020. Meanwhile in Dubai, the department of finance ordered all government agencies to cut capital spending by minimum 50%, reduce spending on current infrastructure projects to avoid cost overruns, and delay new government construction projects until further notice. On the other hand, due to impacts from Covid-19 and lower oil productions, Abu Dhabi’s real GDP is expected to contract by 7.5% in 2020. This would increase the capital’s fiscal deficit from 0.3% in 2019 to about 12% in 2020.

In oil & gas news, deals and partnerships have been on shaky grounds. Some deals fell apart, like the construction of offshore facilities for the Dalma gas development projects, that ADNOC terminated the contracts for. While some partnerships emerged, similarly to ADQ assuming full ownership of Natural Petroleum Construction Co. after buying out Consolidated Contractors Company’s shares. On the other hand, successful deals weren’t as abundant as previous years, nonetheless there were still major deals signed. Of which, ADNOC agreeing to sell a 49% stake in ADNOC gas pipelines, this deal has become one of the largest global energy infrastructure transactions, costing $20.7bn to a consortium of investors, operators, sovereign wealth, and pension funds. In contrast, the power & water sector has progressed relatively well considering the problems of this year. Dubai had a couple of successful dealings which included, Dubai Holding signing an MoU with Electricite De France to explore collaborations in sustainable energy solutions, support services and many more. DEWA retendered the Hassyan Sea Water Reverse Osmosis Plant Project, which is the firm’s first project based on the Independent Water Producer model. On the other side of the desert, Abu Dhabi has had several successful ventures. Notably, AD National Energy Co. created one of the largest utility companies in the MENA region through the successful merger with ADPower. ADPower also signed an agreement with Tadweer for the development of the two waste-to-energy plants with a total capacity of 1.5Mn tons per year. Finally, ADNOC and ADPower have joined together and issued a join tender for a first of its kind project in the MENA region. This project sets out to develop and operate the regions first HVDC sub-sea transmission system, this system will connect ADNOC’s offshore production facilities to ADPower’s onshore electricity grid.

The construction business in the UAE is as how its always been, very active all over the country. Most projects have been awarded and initiated in Dubai and Abu Dhabi with a few in other Emirates. In Sharjah, $1.4bn (AED5bn) has been allocated to the development of the city of Kalba. While in Ajman, HH Sheikh Humaid bin Rashid Al Nuaimi issued a new law that aims to regulate real estate development projects in the emirate to forge a safe investment environment. In Dubai there are a few more active projects, which include but are not limited to: Sunset Promenade which is a new cluster of floating islands that is set to be built in Dubai as apart of a mega project announced by the RTA. Also, under the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, Meraas will join forces with Dubai Holding to sustain and advance growth by building on gains, spurs efforts, and boosting Dubai’s global competitiveness. This year in terms of the number of projects, Abu Dhabi takes the figurative cake. Since the start of the year announcements would come almost monthly from Abu Dhabi about new projects. Those projects include development of Abu Dhabi’s first greenfield commercial bulk liquid storage terminal at Khalifa Port, building the world’s largest indoor vertical farm, an innovation hub and academic campus, and many more.

The UAE may have received tough news with the Expo being delayed, but it hasn’t stopped them from advancing themselves forward. The country focused on how to adapt throughout this year, the pandemic and through all these decisions and advancements, the UAE will surely propel itself to even further heights.

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