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[mesquite]

Hundreds of realty projects bite the dust
9/19/2009 1:49:52


Some 759 construction projects collectively worth billions of dollars have been either shelved or put off in the GCC due to the world financial crisis.

An extensive study carried out by a Dubai-based research organization suggests that the United Arab Emirates (UAE) is the worst-hit in this unprecedented downslide of Arab Gulf�s thriving construction industry.

�Proleads�, revealing the findings of a Gulf-wide study of the building industry on its website, said the study covered as many as 3,000 construction projects in the entire region and they were totally valued at an astronomical $1.5tr.

Significantly, 75 percent of the projects that have been shelved or put off are concentrated in the UAE alone whose once-thriving construction industry remains the hardest-hit in the region.

�Proleads� said its study, extensive as it was, was completed as recently as the second half of this month.

According to the study, Qatar is the least affected in the region as only seven construction projects have been shelved, while 124 are on and due for completion soon. All the projects are collectively valued at a staggering $42bn.

And some of these projects, especially those to do with apartments, are to deliver stocks for occupancy soon.

As noted earlier, in the UAE which bore the brunt, some 566 projects have been shelved due to the global economic meltdown. But some 1,372 are still on in various property segments � commercial, residential as well as the hospitality sector. The total cost of all the projects is estimated at an incredible $900bn.

The 3,000 projects that the study has covered in the entire Gulf region until the middle of this month also includes infrastructure ventures.

In Saudi Arabia, an estimated 106 projects have been cancelled, while 442 are still on. Their total cost is believed to be around $387bn.

In Kuwait, at least 18 construction projects have been scrapped or postponed whereas 90 are still under way. The total value of these ventures is $114bn.

Oman has some 95 construction projects going on and only eight ventures have been scrapped. The value of the projects here is $38bn.

As for Bahrain, despite its small size the number of projects that have been cancelled or put off in this country total 54.

But fortunately for it, as many as 148 projects are still on. The total cost of all the projects is estimated at $38bn, suggests the �Proleads� study.

Of the 3,000 projects, luckily for the region as a whole, a vast majority or 2,271 projects are still on.


What did they expect??

[washingtonpost]

Towering woes overshadow Burj opening


DUBAI: Dubai was preparing yesterday to inaugurate the world's tallest tower, a symbol of the Gulf emirate's unbridled ambitions, amid ongoing fears about a financial catastrophe.

The city state, which borrowed heavily to finance its grandiose projects, is striving to restructure its mountain of debt and face a serious crisis in its real estate sector.

Some observers now appear more confident about Dubai's ability to navigate its way out of the crisis, after many predicted bankruptcy when it requested a debt repayments standstill for its largest group Dubai World in late November. Dubai was bailed out with a last-minute lifeline of $10 billion from neighbouring emirate Abu Dhabi, which enabled Dubai to pay its imminent debt.

"We are much more confident about the situation of Dubai now, after Abu Dhabi's support as well as the comprehensive restructuring plan, than we were a one month ago," said Shuaa Capital chief economist Mahdi Mattar.

"The debt story is not as bad as the market initially thought, when investors were assuming the worst," he said.

Dubai World began negotiations with its creditors in late December with the hope of reaching an agreement over restructuring debt of $22bn, owed by its troubled subsidiaries. The talks followed Dubai World's payment of $4.1bn in maturing bonds owed by its real estate arm, Nakheel, thanks to Abu Dhabi's help.

But the emirate, which has little oil resources, has to deal with a total debt burden amounting to around $100bn, according to estimates.

Its fortunes have turned around as the global financial crisis dried up global finance which was crucial to feed its rapid economic growth, mainly in real estate.

"In Dubai where 90 per cent of the population are expatriates, 50pc of the work force is real estate and construction-based," said UBS bank senior real estate analyst Saud Masud.

He estimated a drop of eight percent in Dubai's population, which was reportedly around 2m before the crisis, while he expected a 2pc drop this year. This decrease in population is expected to deepen the decline in property prices in Dubai which dived 50pc last year, he said.

"There is over supply as more houses are being handed over. With population outflows of 10pc over 2009-2010 and handovers of roughly 40,000 units during the same period, we would not be surprised to see residential over supply of 30pc by end of 2010," he said.

This deterioration has triggered an 80pc drop in projects last year compared with the previous year.

"Big projects have been delayed indefinitely. If investors don't pay developers, they in turn will struggle to pay contractors," he said.

Vacant villas and apartment blocks make now up part of Dubai's landscape, while the most grandiose projects have been put on hold, including a 1km high tower expected to dwarf Dubai's completed Burj Dubai, whose final height is more than 800 metres.

But Dubai's debt crisis does not mean the emirate will sink in the desert sands, analysts agreed.

"Dubai will not be wiped off the map. It is a very important centre and model for the rest of the Middle East," said Masud.

"Dubai's infrastructure is unique in the Middle East, it is a regional financial and tourist hub. The challenge is how to come out of the downturn, by diversifying the economy and finding other levers of growth than real estate," he added.

Mattar agreed that Dubai has built an infrastructure "second to none in the region," positioning the emirate as the regional service hub.

"As oil prices remain at these levels and the global economy recovers, the situation of the whole region is on a growth recovery path - a plus for Dubai," he said.

The tower opening ceremony kicks off at 8pm, featuring fireworks and a light show.