The construction boom in UAE
September 13, 2009 by admin
Filed under Tourists Attractions
Construction is an important part of the development process of the economy of any nation and same is the case with UAE in the last decade the world has witnessed a substantial increase in the number of construction process in the gulf and this increases s all the more visible in UAE. Due to this substantial boom there is a lot of importance that is being given to the construction law in UAE so that the investors have a transparent system to work in. Dubai has always been a city that has witnessed growth, but the recent growth in Dubai is absolutely mind boggling. sThe main reason why there is an up spurt of construction job in Dubai in particular and the UAE in general is that the construction work gets completed quite early here. The reason is that Dubai construction companies hire more laborers than what the western companies hire. In Dubai there is no dearth of human capital, you can easily find laborers, engineers and architects. sSince the year 2000, the Dubais municipality has started off a great number of plans across the entire city of Dubai; the major areas which have witnessed this growth are Mina Seyahi area, which is located toward the Jebel Ali and as further away from Jumeirah. sDubai has about 16% of the worlds cranes. Not only is construction in the UAE and particularly Dubai a faster process, but it is also a much cheaper process compared to other western country. The reason why work gets completed at a cheap rate is that Dubai has access to laborers from the Indian subcontinent who accept lower wages as compared to other countries. sThe main reason why the Dubai government is trying to focus on its construction business is because it does not want to solely rely on its oil reserves. The pi reserves of UAE are expected to get exhausted by the end of 2010 and as such in order to attract revenues it is trying to expand its commercial and corporate activity. sTourism is also being promoted on a large scale with the construction of Dubai land, and other projects that include the making of huge shopping malls, park resorts and other major tourist attractions. sIn Dubai the largest property tycoons are Al Nakheel and Emaar properties. In Dubai the demand is higher than what the supply can meet. The demand is not just more, it out beats supply by a significant margin. Recently the rent in Dubai has also increased considerably. The reason for this increase is the large influx of professionals and companies around the world, who are attracted by the no tax benefit of Dubai, although the rises have been capped to 15% per annum up to 2006, under the directive of Sheikh Mohammad. sThis cap clearly shows that the bad effect of uncontrolled rise in rent. As the development process has just started the laws here are a still mawkish. The laws here do not match the international standards and are skewed towards the selling company. William King is the director of Dubai Burj Dubai Property & Burj Dubai Real Estate: http://www.bayut.com/dubai_business_bay/burj_dubai_property/real_estate_properties-sale-5102-1.html , Lahore Real Estate & Property Pakistan Properties: http://www.zameen.com/Homes/Lahore-1-1.html , Dubai Estate Agents & Brokers Properties: http://www.bayut.com/agents.html and Dubai Property Developments & UAE & Dubai Real Estate Projects: http://www.bayut.com/developments.html . He has 18 years of experience in the marketing and trading industries and has been helping retailers, entrepreneurs and startups with their product sourcing, promotion, marketing and supply chain requirements.
Lack of Low-cost Housing in Dubai
Dubai’s private developers have recently announced that erecting low-cost housing was not their first priority. High land rates in the emirate have prevented them from taking up low-range housing assignments. According to Ahmad Al Abdullah, chairman of New Dubai Properties that has constructed 22 projects worth over $7 billion across the emirate, high land rates are forcing developers into projects that involved building luxurious apartments, office blocks and Dubai hotels. These bring back far better returns on investment as compared to what the affordable housing may deliver. There is already a shortage of three and four star hotels in Dubai that many construction companies are trying to make business from. Nobody dares announcing low-cost housing projects on the other hand though.
According to various estimates 40% of the project amount is normally required for purchasing lands while the rest goes in undertaking construction plans. This means low-cost housing in Dubai may never be profitable in the present-day scenario. There are only four apartment blocks apart from twelve commercial towers and six Dubai hotels that New Dubai Properties has constructed so far. Dubai’s government has failed in checking down its land rates until now, thus causing inflation in the real estate sector. This has also affected the market of affordable hotels in Dubai in a negative way. There is no dearth of the expensive hotels in Dubai on the other hand though, and many native and offshore players are lining up to build many new five star hotels in the emirate.
Expensive real estate prices in Dubai is why many people have decided to live at Sharjah and spend up to three hours traveling down to and up from Dubai on a daily course. While Dubai hotels and furnished apartments may be the right place for high-flying executives, CEOs and holidaymakers to reside, there are many who still can’t afford to have accommodation in apartments or hotels in Dubai. Governmental efforts of encouraging low-cost housing projects have always stood non-starters. The desire of having the largest, tallest and the most advanced infrastructure has escalated Dubai’s cost tremendously. While it may indicate a boom time for the tourism sector, there are many who would think otherwise. The need of saving money to send back home may not allow many expatriates to buy accommodation in today’s scenario, hence they have to move elsewhere facing large scale hurdles.
Dubai’s government will have to find out a way of having a balance between lavish and affordable housing projects. A segment of the free land should be given away at low rates to make this reality. It shouldn’t be ignored for too long, since a large expatriate workforce keeps arriving at Dubai on a daily basis. There is a fear; the lack of affordable housing may slow down the region’s overall growth. More and more expatriates are finding it hard to buy accommodation in Dubai today. Some construction firms have already moved away to other areas within the UAE with an aim at having low-cost housing developments there. This has a potential of inflicting Dubai’s economy severely unless checked by the authorities soon.
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