Boston, MA -- (SBWIRE) -- 03/15/2013 -- BMI Industry View

BMI View: Our 2013 real growth forecast of 4.8% is reinforced by the 2011 numbers coming in exactly how we anticipated and the 2012 data being on track to fulfil or expectations. Significant public spending, a growing tourism sector, increased direct foreign investment and an improved business environment are all driving activity in the construction sector. However, we are now seeing a more moderated scale of future projects, in line with a more realistic demand picture. We believe this outlook will be supported by ongoing or re-started projects, rather than a stream of new construction contracts.

Factors driving construction industry growth:

- The UAE is spending US$58bn on roads and bridges projects, the cost taken up by projects currently under way or in the planning phase. The significant figure - which is more than any other Gulf Cooperation Country (GCC) country - accounts for nearly half of the regional spend.
- The second phase of the US$11bn Etihad Railway Network - also part of the US$100bn GCC Railway Network - has entered the tendering phase. Construction is scheduled to start early 2013 and will provide a significant boost to the construction industry.
- Progress is being made on flagship multibillion dollar projects, such as the expansion of Dubai and Abu Dhabi international airports. These projects sustain industry activity, though they are also seeing delays and downsizings, such as those experienced at the Al Maktoom International Airport (Dubai).
- We continue to see increasing opportunities in the hospitality and tourism sectors. Tourism and tourismrelated projects provided a welcome source of value for the construction industry and wider economy in 2011. We expect this to continue through 2013 and beyond as the UAE, most notably Dubai and Abu Dhabi, position themselves as global business and tourism hubs.
- Though the nuclear power project in Abu Dhabi has been plagued by project delays and cost inflation - the cost estimate has risen by a staggering US$10bn since its initial announcement, taking the total to US $30bn - we have seen significant steps forward during the second half of 2012. US$3bn worth of contracts to provide, convert and enrich uranium has been awarded, and a frame-work contract has been signed with Canada, enabling the latter to export its technology.
- The UAE continues to make headways with its push for renewable energy. The first phase of the Shams 1, 100-megawatt solar plant was expected to come online by the end of 2012.

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