Friday, February 06, 2009

The big slowdown

You may have seen the list doing the rounds of various projects announced as being on hold or cancelled.

It lists 57 projects with a total value of nearly US$75 billion. Actually, only seven are listed as cancelled, the rest it says are on hold.

There's also a report today of some research by Proleads, who looked at 1,289 projects in the UAE.

That says projects valued at $582 billion are now on hold, a huge 52.8% of the country's construction.

That's a lot of work not happening. A lot of jobs lost, a lot of investment lost or deferred.

But the other side of the coin is that about half of the projects will continue, about $500 billion dollars-worth.

It's one hell of a slowdown but there's still one hell of a development programme happening.

I've said before that looking at the bigger picture the slowdown is a good thing for Dubai. The more I think about it the more I believe that. I'm not minimising the effect on people who lose their jobs, it's happened to me twice in the past so I know what it means.

Part of the culture of the region is 'it must be now' and that applied to the development of Dubai. Attempting to build in twenty years what took hundreds or more elsewhere.

Some of it's been good, like the groundbreaking work that's pushed the boundaries of engineering. The creation of Burj Al Arab's island and the building itself, new records for construction achieved with Burj Dubai, the building of the Palm Islands and The World. They've all pushed engineers to find ways to do what hasn't been done before.

The problem is that it was too much all at once. Separate cities to form a vast metropolis all being built at the same time. Finished work being ripped up and done again to a different plan. Endless hole digging in finished work to lay yet more pipes for newer projects.

Construction fatigue set in for many of us - probably all of us in New Dubai.

The infrastructure is way behind the development - we still only have one sewage treatment plant, one desalination plant, no real public transport system, chaotic roads, a serious lack of parking, an antiquated postal service, not a good enough spread of police , fire or ambulance services.

The financial slowdown means a much needed slowdown in the frantic pace. It gives an opportunity to get the infrastructure closer to what's needed, catch breath and take stock, maybe even get some real town planning done.

Gulf News' report on the Proleads research is here.


Umar in Dubai said...

Seabee, I couldn't agree with you more on this. It really is a blessing in disguise for Dubai.

The Wizard of D said...

A correction is always good. But whats scary is the rapid speed at which it is happening. This has a huge cascading effect on other areas leaving this place in a disarry....

Seabee said...

Wiz the world is falling off the cliff at rapid speed and we're part of it. I just heard the US figures of just under 600,000 jobs lost in January alone.
The UK has its lowest interest rate in history and like the US is heading rapidly towards zero interest rate.

samuraisam said...

Seabee: I think it really depends on your definition of 'on hold'.

I've heard about some projects being downsized in mid-construction (i.e. a 30 floor building being finished at 15 floors) but I haven't seen anything for myself yet.

Seabee said...

Sam, I agree. It's all about semantics. Developers are 'revisiting the master plan' for example, meaning redesigning the whole thing and probably on a much smaller scale.

It'll be a while before we see with our own eyes what is actually happening.

Cat Russell said...

I agree, it will be great if the breathing room is used to get the infrastructure up to speed. I would love to see the roads around al barsha, the greens, the springs (and anywhere else for that matter) actually finished, as it seems after the first effort to get them all dug up nothing more has happened. Construction fatigue - how true!

DUBAI JAZZ said...

For the fortunate beings who will manage to duck the storm and keep their jobs, the slow down is certainly a bless.

The American stimulus package is through, so I guess the oil price will go up again in the near future, and there will be cash to invest.

One would have hoped the boom was steady,realistic and, as suggested above, concurrent with the development of infra-struture.