The change in the construction scene in the UAE – from boom to bust and now on the rise again?
By Rohan Saldanha, Business Development Manager For Auger Torque
The Middle East is one of the fastest growing regions globally with the UAE in pole position. The reasons are many, but especially including Dubai hosting the 2020 Dubai Expo. Set against the context of the ups and downs of the geo-political landscape, the UAE continues to outperform many mature regions including Europe and the US in terms of percentage growth due to the improved likelihood of future investment and the increased availability of large infrastructure related contracts.
On a wider point, the UAEâ€™s infrastructure is already one of the most advanced in the GCC region due to its well-integrated transport systems and assembly of iconic structures. In addition, it has become a highly attractive destination from an investment standpoint. Not only does the region provide a wide variety of opportunities, due to its open business environment, but also is a preferred route for international companies entering or planning to enter the Middle East market. These reasons, alongside events such as the Dubai Expo, will only add to the regionâ€™s attractiveness as further support is demanded for the increased infrastructure development projects.
The UAE continues to grow
The Expo-effect in Dubai has enabled the wider UAE to record an increase in construction awards in 2016, but it is the host emirate, Dubai, that saw the most activity, accounting for 72 percent of all construction and transport deals. In total, the UAE made $35.4bn of construction and transport awards during 2016, up from $30.1bn in 2015.
In terms of the wider GCC region, the UAE tops the pile when it comes to infrastructure related projects awarded, as proven by the following chart.
The reasons for this include increases in private sector investment, financial support from the Gulf Development Fund and significant contract awards from the Expo 2020 Bureau. As we head into the latter half of 2017, the Expo 2020 Bureau has stated it will have awarded 47 construction contracts worth $3bn by the end of this year. Once again, Dubai is expected to top the pile in terms of performance, with the other GCC regions coming up behind. Overall, it is anticipated that new building contracts across the GCC will hit $ 85.6bn by the end of 2017.
Succeeding where others do not
Although there are reasons to be optimistic as these statistics suggest, caution is still being advised by a variety of sources due to the continuation of constrained capital spending and limited funds from the Public Private Partnership (PPP). However, despite this, the recovery in oil prices in 2016 has eased some of the pressure on the construction industry, while the increased pace of the rollout of economic reforms is seeing an improvement in confidence alongside an uplift in new forms of project model.
In this environment of increased infrastructure related solutions at competitive rates, organisations like Auger Torque are finding success due to their unique business model, which provides customers with the multi-functional products they require from a local UAE base of operations.
Although the use of Augers and ancillary equipment is not a new invention within the UAE, the provision of high quality drive units that can be adapted and used with existing heavy equipment to enable their operation as a drilling solution, is an issue many organisations have been looking for a number of years. Additionally, trenching attachments for electrical and plumbing activities, alongside accessories like sweeper brooms and hedge trimmers, cannot be purchased on a local basis. In the interim, organisations have been buying equipment from Suppliers and dealers from mainland Europe or the US, which is both costly and often provides no access to spare parts or essential maintenance.
The result: large, expensive machinery that can only be used until it is either unfit for purpose, breaks down or requires extensive amounts of resource sourcing, technical support, spare parts or newer technologies to replace what they have. This results in a loss of productivity and an increased OPEX cost to the organisation.
With customers demanding increased functionality from their parent machines, organisations like Auger Torque have responded to this need by providing a wide range of solutions that give companies the ability to use existing equipment to complete a wide variety of tasks (for example, taking excavators, skid steers and telehandlers and converting them into multifunctional assets that can conduct drilling operations or trenching, or that can act as sweeper brooms, hedge trimmers and concrete mixers to name a few functions). In addition, spare parts and maintenance solutions have been added to the package, resolving companiesâ€™ issues of not being able to easily fix equipment when it breaks down.
There are plenty of reasons to be optimistic about the future state of the construction and infrastructure related industries in the UAE especially, but also the wider Middle East. After all, UAE infrastructure continues to be the most advanced in the GCC region.
This is likely to continue in the years to come, with events like the 2020 Dubai Expo on the horizon, alongside increases in private investment and the open business environment operated by the region. That said, caution will be required in the wake of continued constraints around capital spending.
More efficient use of construction equipment, alongside the availability of spare parts and maintenance packages, will assist contractors in their quest for both improved project delivery and lower costs in the future. For these reasons, organisations are looking towards companies like Auger Torque, who not only provide multi-functional Augers and trenching accessories, but also supply spare parts and maintenance packages. A win-win for everyone.