Economic figures boost construction prospects

Dubai Skyline with Sheikh Zayed Road

The economic outlook across the UAE – vital to its building design and construction work – is growing steadily, a recent worldwide financial analysis has revealed.

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But it is flattening out or even slowing down in other emerging markets such as Brazil and India, according to the figures.

The latest Global Commercial Property Survey, from British-based Royal Institution of Chartered Surveyors (RICS), says the economy across the emirates is “continuing to gain ground, reversing the negative pattern that characterised the market from the back end of 2009 through till the middle of last year”.

With a per capita GDP of $60,000, the UAE ranks in the world’s top ten richest economies. It consistently shows a financial surplus – something most Governments in the world can only dream about – and over the last decade, it has generated budget surpluses equivalent to $270bn.

Economists point to the area’s mix of energy resources, retail, tourism and hospitality as the defining factors in keeping it moving forwards economically so creating opportunities in the fields of building design and construction.

Simon Jon Williams, chief economist at HSBC for the Middle East and North Africa, said: “I see oxygenated blood flowing through the UAE economy.

“The UAE economy is unique. It’s the only place in the region which combines both the enormous wealth of a major oil producer with the dynamism of an open export-orientated model sector rooted in Dubai.

“The combination of those two different economies, to me, offers enormous opportunities for businesses whether it’s those looking for a hub to access the broader Middle East region or those that sell into the oil and gas sector looking for projects and infrastructure – and in real estate as well.”

Other analysts took to increased educational opportunities across the UAE as more universities open their doors as well as an increase in consumer confidence which boosts shopping mall revenue and the restaurant business.

Meanwhile Brazil has seen three successive quarters of fall in growth – with the residential property sector particularly hard hit.

Across India the industry remains stable with no appreciable growth or fall. This is mainly due to the central bank displaying caution because of the subdued economy and the volatility of its currency.

In Asia Japan is leading the way on the investment side while also delivering a strong result for the occupier market helped by recent growth-orientated policies being introduced by Prime Minister, Shinzo Abe.

China remains firm – despite a slight loss of economic momentum and growing concern over the rapid increase in credit, both in consumer spending and business dealings.

With the exception of Germany, European economic outlooks remain subdued as the after-effects of the recession take time to dissipate. Australia has also seen disappointing economic growth.

But the USA has seen a slight upturn in recent weeks with share prices rising and investors seeming to have regained a measure of confidence in business performance across the private sector.

Simon Rubinsohn, RICS Chief Economist, said: “The latest numbers demonstrate that the recovery story is continuing to gain traction in both the UAE and Japan.”

However, he also stated a cautionary note – based on possible actions by the US Federal Reserve Bank (FRB) which could tighten the worldwide flow of available cash.

Rubinsohn said: ““The turmoil that was evident particularly in financial markets in the emerging world as Ben Bernanke (FRB chairman) raised the prospect of scaling back on his quantitative easing programme has as yet had little impact on physical property.

“However as US monetary policy gradually moves onto a slightly more restrictive trajectory, there is a risk that the less benign financial conditions will have an impact on some of the more vulnerable markets.”

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