Value of UAE projects rises to $930 billion
The UAE is carrying out projects in construction and other sectors with
a total value of nearly $930 billion (Dh3.4 trillion) - some 45 per
cent of all projects planned in the Gulf, a Kuwaiti bank said yesterday.
The
combined value of projects planned or being carried out in the GCC
totalled around $2.1trn (Dh7.7trn) at the end of the second quarter of
2009, more than four times the estimated value of projects in June
2005, an annual growth of nearly 50 per cent, Kuwait National Bank
(KNB) said in a study.
Quoting the Meed project database, the
bank said the construction sector accounts for the bulk of those
projects in the absence of major investment opportunities in industry
and other sectors. "This is an immense figure, worth two to three times
the size of the region's expected GDP this year, and some $55,000 for
each inhabitant of the Gulf.
"Although time series data is not
easily available, what there is supports the claim that there has been
explosive growth in planned spending," the study said.
It said
the figures include projects at all stages of completion - from the
early stages of planning (the 'planned', 'feasibility study' and
'outline design' stages), to advanced stages of planning (at the
'invitation to bid' stage) and to those projects actually underway
(where the main contract has already been awarded).
It noted
that the figures exclude projects that are currently on hold, adding
that some 29 per cent of the total projects or around $610bn are
already underway, with the remainder still at the planning stage.
"The
UAE accounts for by far the biggest share of project activity, totaling
around $929bn and affirming its position as the leading GCC country in
attracting capital investment. Some 81 per cent of the UAE projects are
in the construction sector," KNB said in a 10-page report.
"Indeed,
the construction sector dominates in every GCC country, though to a
lesser degree... while the total value of projects in the UAE is far
higher than anywhere else, Saudi Arabia has a much larger base of
non-construction related projects - some $224bn, which is 28 per cent
larger than in the UAE. This probably reflects the larger size of the
Saudi economy in absolute terms, necessitating a greater degree of
industrial diversification."
According to the study, the higher
value of non-construction-related projects in Saudi Arabia stems
largely from the petrochemical, power and utilities sectors. At a
combined $127bn, the value of the kingdom's projects in those sectors
is about 35 per cent larger than in the UAE.
"The overwhelming
balance of non-construction-related projects in other GCC countries
comes in the oil and gas, power and utilities sectors, with the latter
reflecting the region's growing domestic power needs," it said.
"Overall,
these data show that a huge pipeline of potential projects in the GCC
remains, though largely in the construction sector and weighted towards
the UAE. If executed as planned, the schemes would provide a major
stimulus to the regional economy and help it pull through the current
economic downturn."
But KNB added that because of a weakening
growth outlook and credit constraints, a number of current investment
proposals are being rethought. "2009 is due to be a peak year for GCC
project starts. But a combination of demand weakness and credit
constraints now cloud the outlook," it said.
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