Apr 22 2012
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Projects: Dubai beats Abu Dhabi
Dubai awarded more projects than Abu Dhabi for the first time since the fourth quarter of 2008.
Dubai entities awarded USD1.8-billion of new projects compared to the UAE capital's subdued USD596-million, respectively, according to EFG-Hermes.
"Awards in Dubai rose 152.1% Q-o-Q in 1Q2012, versus a 93% Q-o-Q decline for Abu Dhabi. Dubai's project awards were related to hospitality and airport expansion, sectors that are seeing robust growth, making access to funding available," said EFG-Hermes in a report.
"Abu Dhabi's award schedule continues to face delays, with 87.7% of expected awards in 1Q2012 cancelled or on hold, compared to 12.6% for Dubai. Around USD26.6 billion of projects are in this year's pipeline for Abu Dhabi, compared to USD6.7 billion for Dubai. Delay concerns remain, with only a small portion of these expected awards likely to go through."
While Dubai seems to be showing signs of a return to form, project announcements remained subdued in the region during the quarter.
March saw USD4.3 -billion of new projects awarded across the region, compared to USD8-billion in February and USD6.3-billion in January, says Citibank.
Overall, projects valued at USD8.5-billion were awarded in the first quarter, compared to USD27-billion during the same period last year.
"Project awards are generally lumpy. However we would expect ongoing strength in spending driven by the 'Arab Spring' and government desire to avoid unrest," said the Egyptian bank. "In terms of number of projects awarded, there were 22 in March. This is in line with the average awarded over 2011. Year-to-date 76 projects have been awarded across MENA. This would indicate a similar run-rate when compared with the FY11."
Surprisingly, Kuwait has awarded the large value of projects to date this year, accounting for 38% of the projects, on the back of one major USD5.9-billion aviation sector deal. That has skewed the project space somewhat, as the country's remains a 'lacklustre player' in construction.
Saudi Arabia and the UAE were tied for second spot with USD2.9-billion worth of project announcements in the past quarter. Qatar, which is gearing up for the 2022 FIFA World Cup, announced USD1.8-billion worth of projects in the first quarter of the year, Citibank data shows.
Egypt surprised with USD1-billion projects, but don't expect a raft of news from the North African country before the Presidential elections have taken place.
GCC AT NEARLY USD2 TRILLION
Overall, the GCC is now a USD1.9 trillion market by the end of March 2012, up 4.5% since the start of the year, Citibank data shows. The wider regional market, including Iran and Iraq, has already crossed USD2.5-trillion, although Tehran is now hampered by severe international sanctions.
"Saudi Arabia has continued to widen its lead on UAE. This market is up almost 14% since Jan and now stands at close to USD750 billion," says the American bank. "The UAE has continued to lose pace. The market now stands at USD560-billion (down 12% year-on-year). New project announcements in this market have not managed to offset completed or delayed projects."
Indeed, the number of cancelled and delayed projects stands at USD719-billion, with the UAE accounting for 57% of the deals that seems destined to be mothballed or altogether scratched by their sponsors.
Saudi Maaden-Alcoa alumina refinery complex was the largest project to commence work, according to Zawya Projects Monitor. The USD2 billion complex, saw the first concrete being poured at the Ras Al Khair, which is set to produce 1.8 million metric tonnes of smelter-grade alumina per year when completed.
Meanwhile, the Middle East Dredging Company was awarded a construction to start work on the USD1.23-billion New Doha Port, Zawya Projects Monitor data shows.
BETTER PROSPECTS IN Q2, Q3
Saudi Arabia, the region's largest markets for project developments was hit by delays to a number of projects, including a USD5 billion aluminium smelter project and a USD2 billion central business district and residential zone.
Analysts expect projects approvals to be pushed to the third and fourth quarter, keeping the pipeline healthy.
The UAE is expected to see a number of new projects awarded across transportation and oil, suggesting a strong year for the region's second largest market.
Qatar is also expecting a strong year for projects with virtually around USD15-billion projects in various stages of the bidding process.
While Oman could benefit from a strong year in project development, Bahrain and Kuwait are expected to have a low-key year given their various political plights.
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