Oct 28 2009
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Rise in infrastructure spending lauded
The budget allocation to infrastructure development has increased in 2010 by more than 200 per cent compared to the previous year.
The government had earmarked Dh2.15 billion, or 5.1 per cent of the Dh42.2bn budget, for infrastructure in 2009. However, this year about Dh7.6bn, or 17.5 per cent of the Dh43.6bn budget, has been devoted to infrastructure projects.
Prominent among the infrastructure projects would be the construction of 40,000 houses for UAE nationals under the Zayed Housing Programme.
One senior contractor said usually when the economy slows and the construction industry declines the government always announces stimulus packages and long-term infrastructure development programmes.
"That is the best way to revive the construction sector. When private developers fail to bring in new projects, it is the government that takes on the responsibility. It is a positive development and will help the sector," said Riad Bsaibes, Chief Operating Officer of Amana Contracting and Steel Buildings .
"In China, it did wonders, especially when they announced major plans to expand roads, bridges and airports. Here in the UAE, all sectors have been affected, but infrastructure was less affected. It is the enabling part of construction and continues to move forward. The best example is the Dubai Metro ," said Bsaibes.
According to statistics provided by Ventures Middle East, infrastructure contracts worth about $9.16bn (Dh33.64bn) are scheduled to be awarded during 2010.
"This is a significant increase when we compare the 2009 and 2007 contracts. Only in 2008 did the construction industry award more infrastructure contracts," said Mibu John of Ventures Middle East.
The situation within the UAE construction sector is getting better, he added.
While in 2007 about $6.7bn worth of infrastructure contracts were awarded, the number increased to $10.8bn in 2008. This year so far infrastructure contracts valued at $6.6bn have been awarded.
Overall 213 building and infrastructure contracts valued at about Dh92.99bn were awarded during the first three quarters of 2009. The number has dropped by 58.2 per cent compared to the previous year.
The percentage share of Abu Dhabi has significantly increased over the last year. While contracts in Abu Dhabi constituted about 27 per cent of the overall number of contracts awarded during the first three quarters in 2008, these increased to 38.49 per cent this year.
In Abu Dhabi about 115 contracts were awarded in 2008 while about 82 contracts have been awarded so far this year.
However, Dubai continues to lead the figures with 249 contracts being awarded in 2008, 58.5 per cent of the over all share, in 2008 compared to 93, or 43.66 per cent, in 2009.
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