$170 Billion Worth of Construction Contracts Cancelled in UAE
16 September 2011
Some $170 billion worth of construction contracts were cancelled in the UAE in August, a 13% increase on July. August also saw a 7% in projects in the pipeline to a total of $175 billion worth. This is being taken as a sign that the market is still a long way from recovery.
Since the property boom ended in 2008, UAE property prices have fallen by up to 64% according to Deutsche bank AG, and many developers have been forced to abandon projects. Some 56% of cancelled or delayed projects for the main markets are in the UAE. Nakheel, the Dubai government owned developer responsible for a number of ambitious projects, was recently forced to write off $21.4 billion of its property assets.
The largest construction market in the Middle East and North Africa region is Saudi Arabia, as it has $630 billion worth of projects either underway or planned. The kingdom saw a 9% growth in projects in the pipeline to a total value of $200 billion. In contrast, Kuwait saw an increase of 38% to $88 billion, and Qatar saw a $7 billion increase in projects in the pipeline to $57 billion.
In total, the projects still in the pipeline in the MENA market increased by 3% to $648 billion, which is largely due to non-property projects. Meanwhile the total value of projects put on hold or cancelled in the region was $1.69 trillion in August, compared to $1.7 trillion in July. The Citigroup report highlights the fact that $5.5 billion worth of projects were awarded across the MENA region, a 13.5% increase year-on-year.