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United Arab Emirates Infrastructure Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: June 2009 Product Code: R302-6569 Description In an effort to cushion the blow to their economies governments of the region, including the UAE’s, havebolstered investments in infrastructure. In Dubai, Dubai Electricity and Water Authority (DEWA) hasembarked on a multi-billion dollar capital expenditure programme, while the government of Abu Dhabi ispushing ahead with its transport master plan.As the dust settles, there is increasing optimism coming from the Gulf region on the momentum behindinfrastructure projects, which seems to have been sustained in spite of the global financial turmoil. True,projects have faced delays and sponsors have departed (see, for instance, the case of Concourse 3 at theDubai Airport), but the speed that infrastructure projects managed to get back on track is noteworthy(after just one month the Concourse 3 project had a new contractor). Therefore, we have significantlyrevised our outlook this quarter, adopting a more optimistic forecast for industry value growth in 2009onwards. The investments Abu Dhabi is making in infrastructure, in transport especially, and alsoongoing infrastructure investments in Dubai, such as the metro, have not only survived the downturn, buthave attracted the attention of international majors, which are seeking a safe haven in the UAE’s (andcertainly the wider Gulf region’s) infrastructure markets. Such investments we believe will grease thewheels of the industry and propel it towards growth in 2009. In BMI’s Q309 UAE Infrastructure Report we forecast that the industry value real growth for 2009 willbe 6.8%, compared with our previous forecast of 0.9%. As such, we forecast that industry value willreach AED86.7bn (US$23.6bn). A similar level of growth is expected for 2010, with value climbing up toAED95.9bn (US$26.1bn). In addition, the positive effect of lower raw material prices cannot be overestimated. As raw materialprices decline, developers in infrastructure and general construction may become more confident aboutlong-term cost estimates, which in 2008 were constantly being revised as prices of steel and cementreached new heights. However, we also stress that most of the developments in the infrastructure sector of late have beenoverwhelmingly government backed. As such, we maintain our assessment that that government-backedinfrastructure spending will sustain the construction sector growth at a time when private investments areexpected to decline. We anticipate that bridge loans will become the modus operandi for the majority ofthe project-financing arrangements as investors take a much more circumspect approach to long-termcommitments, at least while uncertainty is the state of play in the global financial markets. Table of Contents
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