The United Arab Emirates has the most advanced infrastructure amongst all GCC countries, with a well-integrated transport system for support. It is the fifth largest sector in Dubai’s economy accounting for 8-9% of the GDP in 2014 and a steady growth is expected, till they host the World Expo in 2020.The construction sector is growing at a rapid pace and is projected to reach USD XX billion by 2021 at a CAGR of X%. Greater exposure to trade, attractive investment environment, competition, economic diversification, and being the host for the World Expo 2020, are factors affecting the growth of this market.
Hosting of World Expo 2020 Driving Growth
2020 World Expo is expected to pull 25 million visitors to Dubai over the six month period and shall create more than 270,000 jobs. The expo infrastructure is estimated to cost around USD 11 billion. The supporting construction projects, which shall go on in the country due to the expo, put the total cost estimation at USD 17 billion. UAE’s population is also expected to grow during this time, driving expansion in the residential construction sector.
The United Arab Emirates, being the most liberal trade regime in the GCC attracts foreign investors and boosts international capital flows. Low vulnerability to changes in oil prices also drives this market.
Restraints and Challenges
Dubai is already at the peak of its infrastructural development and the conclusion of the World Expo in 2020 shall create a void, leaving many companies and workers jobless. So many foreign investors are not prepared to take up projects here. Construction companies are looking towards other GCC nations such as Qatar and Kingdom of Saudi Arabia as they offer more opportunities. Many projects are being delayed and people fear another property market crash in the near future.
Till 2020, there shall be no shortage of opportunities due to the World Expo. The budget allotted by the government for these projects is huge and UAE has always been considered the most attractive destination from an investment point of view. It has been the preferred route for foreign investors, who plan on starting their business in the Gulf region due to an open and flexible business environment. Low prices of steel and cement in the region also reduce the costs of construction. The United Arab Emirates has potential to become a hub for green tech and renewable energy projects and offers many opportunities in this field.
Key Deliverables in the Study