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Construction spending in GCC crosses Dh230b

posted on 05/02/2005: 792 views

The GCC construction spending in major projects is estimated to have crossed Dh230 billion (US$68.85 billion) with Dubai attracting 67.61 per cent of the total, according to a report by HSBC Bank.

This includes Dh155.97 billion (US$42.5 billion) worth of investment in development and construction undertaken in Dubai, the report said. The rest, Dh74.7 billion (US$20 billion) was invested in the five neighbouring GCC countries.

These estimates, of course, do not include the latest mega projects announced during the last few weeks like the towers under the Jebel Ali Airport and commercial city, the Waterfront, Business Bay projects in Dubai as well as the development of Bubiyan and Failaka islands in Kuwait.

The report said high liquidity, property sector reforms and improving geo-political conditions have created a construction boom in the region. "Record oil prices, funds repatriation post September 11, and improved geopolitical conditions in the region have created significant liquidity in the GCC.

"This increase in liquidity, together with the willingness of the GCC governments to diversify their economies, has created a construction boom ." However, the boom this time is more diverse than ever with regional governments delivering on the promise of economic diversification.

Zahed Chowdhury, HSBC's Investment Analyst with Corporate and Investment Banking and Markets Division, said: "The trickle-down effect of increased spending from oil revenues is apparent in a number of countries in the region. "This is the backbone of the regional boom in construction and building materials sectors. "Furthermore, property sector deregulation in the region has been met by the private sector with considerable enthusiasm.

"Industry estimates range from US$30 billion to US$45 billion for planned real estate and related construction spend over the next seven years." This is on top of the existing business-focused areas known as free zones.

HSBC officials said, further opening up of the property market in other states will trigger more investment as investors see high and fast return on investment. Following Dubai's example, Ajman and Ras Al Khaimah have opened up their property markets for freehold sale to expatriates. Abu Dhabi has also indicated a similar move. Similar deregulation is expected in other GCC states, they said. (The Gulf News)


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