The UAE is currently the largest projects market in the MENA region. Unlike most other countries in the region, it has been able to maintain levels of project activity in the face of lower oil prices. Mainly this is due to the Dubai real estate sector which has shown itself able to prosper regardless of wider economic conditions, but it also highlights an increase in hydrocarbons spending in Abu Dhabi.
However, for the first time in five years, Dubai experienced a drop-off in contract awards in 2018 as the property market slowed due to lower demand growth and looming oversupply. As a whole, the UAE also saw a fall in total project spending. This has increased concerns that the region’s largest market is on the cusp of a downward trend.
Much therefore will depend on the Abu Dhabi oil and gas sector making up the shortfall. With more than $100bn of capital expenditure announced for the next five years, there is a good chance that it will, although this will depend on when this earmarked investment starts to flow through into project awards. At the same time, the rise in oil prices to more than $70 a barrel over the past 18 months has helped ease fears of a spending decline. A record federal budget announced at the end of 2018 suggests the government is intent on maintaining its capital infrastructure spending programme. The forthcoming Dubai Expo event next year also offers assurance of strong project activity levels.