Such has been the pace of growth in the Gulf over the last five years that there simply have not been enough building professionals to meet the demand. This has allowed companies to pick and choose the jobs they want to work on. Profit margins have soared.
But the Gulf construction boom has been stopped dead in its tracks by the global financial crisis, and nowhere has been hit harder than Dubai. While record oil prices and levels of production have enabled the region’s governments to embark on an unprecedented spending programme to develop national infrastructure, it is speculation on property that has propelled the region’s real estate sector to the top of the heap. Private real-estate development accounts for some 65 per cent of the £1.8 trillion-worth of projects planned or underway in the Gulf, with Dubai enjoying by far the biggest share.
Until this summer, the market had proved surprisingly resilient. Now, Dubai’s real estate is crashing fast. Price falls of 40-50 per cent have been seen on some of Dubai’s flagship developments since the summer, and the contagion has spread to neighbours Abu Dhabi, Qatar and Oman. To make matters worse, the fall in oil prices since August will see governments rein in spending on infrastructure projects. Oil will deliver smaller revenues in 2009 than this year, resulting in the first contraction in the Middle East’s economy in almost a decade.