It has been a difficult 12 months for the UAE projects market. Previously viewed as a stable market relatively immune to the oil price, it posted a substantial fall in total project awards in 2019 to just over $31bn from $48bn the previous year.
This considerable decline is attributed primarily to a crash in spending on new real estate construction projects in Dubai. Oversupply, falling demand and rapidly declining property prices have resulted in a sharp decrease in new projects.
The result has seen the UAE fall behind Saudi Arabia in terms of overall projects spending. And with few signs of recovery on the horizon, it is unlikely that the market will be able to grow substantially in the short term.
Many project companies active in the federation have reacted by lowering margins in the face of increased competition or by focusing on other countries, particularly Saudi Arabia. Others have downsized to cut costs or left the market altogether.
In this challenging environment firms will have to be smart in order to prosper. Selecting the right clients, specialising in niche sectors, and introducing novel technologies are all tools companies can harness in order to stay ahead of the competition.
It is not all doom and gloom, however. Some sectors, specially water and renewable energy, are growing. Oil and gas spending in Abu Dhabi is also forecast to increase over the coming year.
Likewise, the pipeline of projects in the UAE sits at more than $700bn.
Although there are undoubtable challenges in the short term, the long term prognosis is still relatively healthy. Regardless of what happens, the UAE market will remain one of the largest projects in the region.