Dubai will have to deal with the thorny issue of what to do with the projects that have been put on hold.
There are now fewer projects being built than there are on hold in Dubai. This will come as no surprise to consultants, contractors or suppliers working in the emirate.
Since October last year, real estate projects have fallen like dominoes as investors have stopped buying properties and developers run out of funds.
The impact on the construction market has been profound. Some $335bn of projects are now on hold compared with $254bn that are being built. Of those that are continuing, many are progressing using extended schedules and minimal workforces.
But despite the suspensions and cancellations, some projects are still moving ahead, and most Dubai-based contractors are confident that they have enough work to see them through the rest of 2009.
The bigger problem is 2010. According to the data, there is some cause for hope. About $334bn worth of projects are still in the planning stages, and if these schemes do go ahead, contractors will have nothing to fear. The question is, will these projects go ahead?
A lot has to happen for developers to stick to their plans. On the finance side, banks must solve their credit problems, and liquidity needs to return to the market. And on the population side, the number of people in the emirate must continue to grow and tourism numbers remain strong if there is a chance of these projects remaining viable.
To make matters worse, if and when market conditions do become more favourable Dubai will have to deal with the thorny issue of what to do with all the projects that have been put on hold before it can move ahead with new schemes.
Until there is a clear strategy outlining what should be done with these abandoned construction sites, it is unlikely that Dubai’s once white-hot construction market will be able to make a convincing return to form.
Author: Colin Foreman. Gulf Bureau Chief
Dubai
