The slowdown in Dubai’s project sector has accelerated in 2019 as the total value of construction and transport project contract awards failed to keep pace with the large volume of projects being completed.
Data from Middle East projects tracker MEED Projects shows that around $1.22bn of construction and transport contracts were awarded in Dubai during the third quarter of this year.
Over the same period there, some $6.68bn worth of projects were completed in the emirate.
This leaves a net loss in the value of construction activity underway in Dubai of $5.46bn.
"Dubai's construction sector runs to stand still. It needs new projects to replace the ones it completes. In 2019 there is the double whammy of fewer projects moving into construction and a large number of projects being completed ahead of Expo 2020," says Colin Foreman, Deputy Editor at GlobalData.
The third-quarter fall in activity follows a similar fall during the second quarter of this year when there were $1.5bn of construction and transport contract awards and $6bn of contracts completed giving a $4.5bn net decrease in construction activity.
The decline in the second quarter was the first time that the market has recorded a loss exceeding $2bn since 2011, when Dubai was still struggling with the after effects of the global financial crisis.
Taking the first three quarters of this year together gives a net loss of $10.9bn of project activity in Dubai.
Foreman adds: "It is the first time that Dubai's construction sector has had three consecutive quarters of net decline since it emerged from the aftermath of the global finance crisis in 2012, and just like the 2008-2012 period, the poor performance echoes Dubai’s property market."
Dubai’s residential market is set to see further softening for the remainder of this year. During the third quarter of 2019, apartment and villa sales prices were down 4% and 3% respectively. Rental rate declines show signs of slowing down with a decrease of 1%.
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