Submitted by Nick Smith, EC Harris, Head of Commerical - Middle East
Biography
Abu Dhabi Executive Committee’s (ADEC) decision to formally approve a number of high-profile development projects is undoubtedly positive news for both Abu Dhabi and the UAE as a whole, and reaffirms the government’s commitment to making the country an attractive, growing and sustainable market. Many of the projects that were officially confirmed yesterday are already well known within the and it will have came as no surprise to anyone that transport and social infrastructure schemes featured heavily whilst investment in the Northern Emirates will also prove very welcome.
As well as sending out a positive signal to the people of Abu Dhabi, ADEC’s announcement also provides the construction industry across the Emirate with a real shot in the arm at the start of what could be a potentially difficult year. Having this early visibility over the future programme of work will be particularly well received and will enable the extended supply chain to plan ahead so that it can try and secure a piece of the action. With several big ticket schemes including the redevelopment of the Khalifa Industrial Zone finally getting the green light, competition is sure to be fierce and will help to drive greater value as contractors battle it out to impress.
Over the coming months what will be particularly interesting to note will be the announcements from the individual departments on their respective budgets and timescales as this could prove key to the future success of the programme. There is likely to be a gap between the announcements and when the projects ultimately come to fruition and whilst this is understandable it could create a challenge around retaining the skilled resource that will be required to deliver these schemes especially if Abu Dhabi finds competing with Qatar for the best professional talent. The volume of work being planned is unlikely to have an inflationary impact on the market however it will be important to monitor the release of these projects to ensure they do not all go out to tender at the same time.
For real estate investors across the Abu Dhabi the key issue will be how they maintain the ongoing value of their investments, whether commercial or social, and is likely to result in an increased focus on life cycle asset performance and measurable ROI. This heightens the need for developers to have strong up-front benefits cases in place from the very outset that are underpinned by robust financial modelling in order to increase their chance when it comes to securing funding.
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