By late April, one-third of all real estate and
construction projects in the six member countries of
the Gulf Cooperation Council were canceled or
put on hold as a direct result of the economy,
according to a report by Kuwait Financial Centre,
a Kuwaiti investment company.
And the report clearly reveals where the
“This quick and huge contraction in supply was
mainly on account of Dubai, which accounts for
91 percent of the $249 billion of projects that got
put on hold or canceled,” the report says.
The number of projects in Dubai was so
high that the crash was a bigger issue there
than in other areas, where the pace of
project development was more moderate.
—Bryan Plamondon, IHS Global Insights, Lexington, Massachusetts, USA
The impact is rippling across the entire
construction sector and slamming even
well-established developers. In February,
Deyaar, a property development company
in Dubai, announced it had put at least a
quarter of its projects on hold. The next
month, Nakheel, a state-owned developer
in Dubai, delayed a $3 billion mall-
expansion project for a year due to the
global downturn. And in May, the CEO of
Limitless, another Dubai real estate developer,
told International Construction the company is
postponing the second phase of its $11 billion
Arabian Canal development project and elimi-
nated 7 percent of its staff in March due to the
Dubai looks to be a victim of its own success.
“The number of projects in Dubai was so high
that the crash was a bigger issue there than in
other areas, where the pace of project development was more moderate,” Mr. Plamondon says.
That means many project managers are now
packing their bags and heading for more lucrative
cities in the region.
“In the construction sector, many workers who
lost positions on projects in Dubai are going to Qatar
or Saudi Arabia because there’s still demand for talent
in those countries,” Mr. Plamondon explains.
“Construction projects in Qatar have slowed
down a bit, especially the ones at the planning
stage, but the government saw it early enough and
quickly stepped in,” adds Isola A. Adediran, PMP,
quantity surveyor at Consulting Engineering
Group, Doha, Qatar. “They made money available to banks before it became a problem. It’s not
Abu Dhabi is also considered to have a more
stable economy and is moving forward with many
megaprojects, including Saadiyat Island, a multi-use project estimated at $27 billion that’s still
on schedule, according to its developer, Tourism
Development & Investment Company of
Abu Dhabi. And work continues on the $22
billion Masdar City, promoted as the world’s
first carbon-free community.
“Where Dubai has been a speculative market, I
think Abu Dhabi is a much more serious, play-by-the-rules market,” Steven Miller, managing director
of the Dubai office of architecture firm FXFOWLE
told Business Week in April. “Saudi Arabia is also off
the charts right now. We’re very busy there.”
Dubai may be floundering, but it could
bounce back when the economy recovers, which
Mr. Plamondon believes might begin as early as
the second half of 2010. At that point, many of
the projects in Dubai could start recovering, but
probably not at the ultra-fast speeds of the past.
That may not be such a bad thing.
A gradual return to growth gives project
managers across the region a chance to implement
a more comprehensive project management
infrastructure than what may have been in place
a few years ago, says Egypt-based Ashraf
Elkhodary, PMP, a senior instructor at project
management training firm ESI International.
“Previously, project management culture and
capability struggled to keep up with the hectic pace
of progress and development, often resulting in
fragmented and dysfunctional project management
functions,” he says. “Now, with the current slowdown, is an ideal time for organizations to take
stock and build truly world-class project delivery
capability ready for the challenges of the future.”