With the latest real estate reports cautioning over-supply will place more pressure on the housing market, one might be forgiven for thinking the construction market is picking up.
This is hardly the case, as a number of projects across the emirate remain on-hold. The most recent figure provided by Meed Projects is that $463bn worth of projects are on-hold in the UAE. The vast majority of these are in Dubai with approximately $323bn on-hold in the emirate according to the project tracker.
Of these projects the most significant is Nakheel’s $95bn Dubai Waterfront, which was to feature a 1.2km-high tower as its anchor project – thereby overtaking Burj Khalifa as the world’s tallest building – and be home to up to 1.5 million people.
In total, Nakheel has approximately $108bn of projects on-hold including construction on the three Palm Islands (Jumeirah, Deira and Jebel Ali) and The World. The company falls under the banner of Dubai World, which caused a media storm on 25 November 2009 by announcing a debt standstill on its $25bn debt. There has since been talk of Dubai World selling some of its land bank, including the above mentioned incomplete projects to meet some of its debts.
A further scheme which was to transform the shape of the emirate, Limitless’s $11bn Arabian Canal has also been put on hold. Another Dubai World subsidiary, the 80-kilometre canal was set to be the largest civil engineering project ever undertaken in Dubai. It was to begin near Al-Maktoum International Airport, pass through Dubai Waterfront and Discovery Gardens, Dubai Industrial City, Jebel Ali Business Park and Jumeirah Golf Estates.
The multi-billion dollar Meraas Development – Jumeirah Gardens – also remains on hold. With a proposed budget of $95bn, the mixed-use project would see the redevelopment of the land in the Satwa area between Sheikh Zayed Road and Al-Wasl Road and from Al-Dhiyafa street to the proposed Creek extension in the Safa Park area, along with seven offshore islands.
It is not just those elaborate schemes that are struggling however. Seemingly successful projects in Dubai have had to stall on rolling-out their full range of schemes.
Emaar’s Downtown Burj Dubai has placed on hold a significant proportion of its supplementary projects. These include a number of smaller residential towers including the 60-storey Burj Park, two 55-storey towers called Burj Place, estimated at $250m and the Grand Boulevard scheme, which would feature 69-storey and 22-storey towers located close to Dubai Mall and DIFC.
Last month, Emaar did announce that two residential towers at 29 Burj Boulevard could open in 2012, two years after the scheduled completion date.
In addition, Dubai Sports City, the $2.5bn sports-tourism and residential complex within Dubailand has seen a number of facets stalled. In particular, its multi-purpose outdoor stadium has been put on hold during its execution stage due to the current financial crisis. The Arena Mall has also been put on hold at the prequalification stage and there is no set timetable to revive the project.
Dubai Sports City is set to be developed in two phases. Phase one will involve the construction of sports stadiums and sports-related facilities and phase two will cover the construction of a gold course and infrastructure.
In its latest lease guide to Dubai in April, Landmark Advisory stated that lease rates in most areas, in both residential and commercial markets, will fall in coming months, especially for lower quality buildings in the least developed and integrated communities. However, it added that certain residential units in key locations within high quality developments will remain stable. This applies to both specific villa developments and apartment buildings.
On the flip side, the situation isn’t wholly negative. There are $114bn-worth of construction and infrastructure projects expected to be awarded in 2010, proving that the coming 12 months need not be viewed with total trepidation.