Month: January 2021

The construction industry, although one of the largest contributors to the UAE economy, is particularly vulnerable to economic cycles. The pandemic has disrupted an industry that faces challenges around the globe and has a history of being slow to change and resistant to adopting technology.

A 2020 McKinsey report found construction is the biggest industry in the world – and yet, it is not performing well, even outside of crises. In numbers, the industry represents 13 per cent of global GDP and 14.5 per cent of the UAE’s GDP as of 2018. However, globally, it has recorded only 1 per cent annual growth.

It is evident that the industry needs to adapt to grow profitably in a post-COVID-19 world. I will outline four shifts that I predict will change the course of the UAE construction industry, and how they can enable the industry to survive and thrive.

Regulation
In the UAE, there are far too many players, and a clean-up of the construction industry is required. We expect distressed players will exit leaving room for established companies to compete, collaborate and grow together.

Governments around the world, including the UAE, have been looking at implementing measures to mitigate the impact of global movements on the industry, while simultaneously encouraging players to operate in a more energy-efficient and cost-efficient manner.

Regulation, such as the new building code issued by the Dubai government, coupled with new technologies will help streamline overall costs, improve profitability and eventually contribute to a new future for the industry.

Disruption by tech
New technologies will play a key role in the new future of the construction industry – enabling collaboration, data-led decision making and greater control of the value chain. For example, robots are slowly appearing in construction sites, conducting image capture or laser scanning work in places that humans cannot reach. There are robots that improve the speed and quality of regular construction work as well.

Artificial intelligence, 3D printing, and drones have also made an appearance, improving timelines and safety on construction sites. The use of these will facilitate the move towards a sustainable future for contractors and developers.

Climate change
Looking beyond the buildings themselves, the threat of climate change is increasing and cannot be ignored by the construction industry. Sourcing the right materials to create healthy living spaces will also become a priority.

Recognising the very real threat of climate change, the UAE has implemented a number of initiatives including the UAE Green Development Strategy. As a key contributor to the UAE economy, the construction industry will be increasingly aware of their impact on the environment.

Companies will increasingly consider the carbon and general environmental impact of sourcing construction materials, gravitating towards materials that use less energy and water. Supply chains will be optimised in a way that makes it possible to source energy-efficient and sustainable materials.

Shift in focus
As we move towards a post-COVID-19 world, it is evident that priorities in construction and development will change, as customers will become increasingly sophisticated. The pandemic has made all of us re-asses the spaces we want to live and work in.

Residents will look for energy-efficient, smart buildings that have good indoor air quality. Subsequently, these sorts of buildings will become a higher priority for developers. Healthy buildings will be a key component of future cities, and governments will need to work closely with contractors in order to introduce regulation that ensures all buildings, specifically schools and hospitals, are built to standards in a cost-efficient manner.

Like in other industries, the pandemic has accelerated changes that were already underway in construction. The cities of the future will be even more concerned with the health of residents, opting for policies that promote better air quality, and energy efficiency.

New technology combined with the appropriate regulation and used in a way that prioritises sustainable development will be the key to unlocking a valuable and sustainable future for the construction industry.

Source:https://gulfnews.com/business/property/heres-why-uaes-construction-industry-needs-to-pick-up-pace-of-change-1.1610097889474

The UAE’s decision to resume trade ties with Qatar is seen markedly improving investment prospects between the two countries, with investor optimism rising as stocks gained in both markets.

Major Gulf stock markets ended the first trading week of the New Year on a high and logged weekly gains as regional markets benefited from a rise in oil prices and an easing in trade restrictions with Qatar.

Lifting of trade and travel restrictions will help better trade, tourism and logistics between both countries, analysts at Standard Chartered evaluated in a note, with both markets set to benefit even further.

UAE property sector to benefit
With the UAE-Qatar bilateral trade resumption, analysts widely view that the real estate and construction sector in the UAE stands to profit, as Qatar gains further access to sectors in the emirates.

A rush of investments is eyed between the countries upon the borders and trade opening up again, which is a much-needed boost for the UAE infrastructure industry, which has many projects on hold.

There is pent up demand in Dubai’s property market, with real estate seen rebounding and buyers set to capitalise on low prices – making the latest developments viewed as aptly-timed for the fraught sector.

Stock markets, economies to profit
Qatar’s stock markets, sectors and economy stand to equally benefit as well. Standard Chartered now sees Qatar’s economy growing 3 per cent, revising upward its previous growth target of 2.1 per cent – higher than the 2.2 per cent forecast Qatar gave last month in its 2021 budget.

“The end of the blockade should encourage Gulf tourists back to Qatar when the pandemic eventually eases,” analysts Fitch Ratings wrote. “This should help reduce the pressure on the country’s distressed real estate and hospitality sectors, which are the largest sources of asset-quality problems for banks.”

Apart from this, and with new markets now opening in both Israel and Qatar, multiple Dubai-based analysts predict a “very” bullish UAE stock market during the ongoing first quarter with a rush of investors looking set to take advantage of new opportunities – a benefit that is seen from a business standpoint as well.

Qatar banking stocks to get boost
Qatari companies including banks are forecast to get a shot in the arm from a deal to end Doha’s row with Gulf States, analysts at Qatar National Bank’s Financial Services Research reiterated in a note.

The blockade led to the withdrawal of about $30 billion of non-resident deposits from Qatari banks in June-October 2017, predominantly by Saudi Arabian depositors but also by some from the UAE, causing tightening of foreign-currency liquidity, Fitch Ratings noted.

“We expect Saudi clients, who withdrew deposits from Qatari banks due to the blockade, to start shifting some of their funds back,” the analysts at Fitch Ratings further added, which will help improve view of banking stocks and sectors as well.

Investors in UAE, Qatar cheer move
While Qatar’s index concluded last week with a 2.3 per cent gain – helped by a near 1 per cent jump at the end of the week – the Gulf’s biggest lender Qatar National Bank rose 1.4 per cent on Thursday.

The past week saw investors cheer the breakthrough in Qatar’s over three-year diplomatic rift with Saudi Arabia and other GCC countries as Arab leaders gathered for a summit focused on ending a long-running dispute.

While Dubai’s blue-chip benchmark gained in four of the five sessions last week to post a weekly gain of 5.4 per cent, the Abu Dhabi index ended 2.4 per cent higher for the week. Dubai unveiled its fifth stimulus package, worth Dh315 million to counter the economic impact of the COVID-19 pandemic.

Moreover, another factor aiding both stock markets is the rising price of oil. Crude hit its highest since late February after a fall in US stockpiles added further support following Saudi Arabia’s unilateral decision to cut output.

Source:https://gulfnews.com/business/analysis/lifting-of-uae-qatar-restrictions-brighten-stock-market-prospects-1.76367640

The reopening of land, air and sea borders between the UAE and Qatar is expected to see a surge in businesses between the two nations while the ending of a three-year standoff between Qatar and its immediate neighbours will benefit Qatar and GCC economies in the medium term, according to analysts.

“The reopening of borders will allow the recommencement of cross-border trade, services and travel that has been largely in hiatus since the embargo was imposed in June 2017, the diplomatic thaw is unlikely to have immediate material credit ramifications due to the limited intra-GCC trade linkages,” said Thaddeus Best an analyst at rating agency Moody’s.

According to Moody’s, the prolonged duration of the diplomatic spat, which provided Qatar with ample time to build trade and financial ties with new partners outside the GCC in the interim and thus the short-term impact on Qatar economy will be limited. It will nevertheless have some economic benefits for tourism and trade in the region at a time when both sectors are still reeling from the coronavirus shock.

Qatar’s main exports to the GCC, namely piped natural gas to the UAE through the Dolphin pipeline, continued undisrupted throughout the diplomatic dispute. Abu Dhabi National Oil Company (ADNOC) and Qatar Petroleum also renewed an oilfield concession in 2018 despite the embargo.

Tourism impact
The agreement will once again allow visitors to Qatar from Saudi Arabia, Bahrain and the UAE, which accounted for almost 40 per cent of total visitors prior to the dispute. Tourism is not a major contributor to the Qatari economy, accounting for around 9 per cent of GDP, and the pandemic will constrain near-term upside potential, Moody’s noted.

“That said, over the medium-term, the normalisation of relations will allow regional football fans, especially from Saudi Arabia, to attend the 2022 FIFA World Cup. It will also allow Qatar Airways to resume flights over the rest of GCC,” said Alexander Perjessy, an analyst at Moody’s.

Rating agency Fitch said the reopening of borders with neighbours will help Qatar’s battered non-oil economy.

“A resumption of travel links will eventually lift tourism inflows, and greater interest from regional buyers could support the real estate market, which has been in a multi-year downturn,” Krisjanis Krustins, Director, Sovereign Ratings, Fitch Ratings.

UAE and Saudi gains
The UAE – especially Dubai – and Saudi Arabia may benefit more from the reopening of trade, tourism and investment channels with Qatar given their tourism and real estate sectors, according to Moody’s.

However, the rating agency said these gains should be kept in perspective in the context that Qatari tourists accounted for about 1 per cent of Dubai’s visitors before the border closure although they accounted for a proportionately larger share of tourism receipts because of high income levels. As such, the reopening of borders will have limited impact on government revenue and overall fiscal performances across the GCC.

Qatar’s financial system could also benefit if lenders and depositors from the blockading GCC sovereigns return. The normalisation of relations could support renewed inflows of deposits and cross-border lending from the GCC, potentially reversing the decline witnessed since the dispute, but the relatively high average credit rating for Qatari banks has supported ample access to foreign funding regardless.

Source:https://gulfnews.com/business/uae-qatar-ties-reopening-of-borders-to-benefit-uae-and-gcc-economies-1.76372589