Coronavirus will reshape UAE construction

The UAE’s construction sector has been indirectly affected by some of the social distancing measures that have been implemented to ‘flatten the curve’ of the spread of the coronavirus (COVID-19), says GlobalData, a leading data and analytics company.

Global economic activity has slowed sharply following the rapid spread of the virus. The pandemic has caused business closures, city curfews, travel bans, financial market upheavals and manufacturing shutdowns in major global economic hubs.

The impact of the virus has also been felt in the UAE, where precautionary measures have been implemented to combat the spread of the virus through social distancing.

Colin Foreman, Deputy Editor at GlobalData, comments: “In the construction sector, remote working, which some private sector employers in the UAE have voluntarily offered, could impact administrative procedures that are essential for site works to progress, such as sign-offs and schedule management.

“Meanwhile, even though cargo travel currently faces fewer restrictions than passenger flights, supply chain disruptions are likely to deepen in the weeks ahead. China – the world’s largest exporter and the epicentre of COVID-19 – has only just begun a slow recovery after its factories were shut down for almost two months to curb the spread of the virus.”

Procurement alternatives to Chinese suppliers, such as those in India, Singapore, Thailand and the US, are already being approached by construction companies in the UAE. However, as more countries suspend manufacturing and business operations to contain the virus, questions persist about whether these new supply markets will be in a position to fulfil their export commitments during the second and third quarters of this year.

Foreman continues: “So far, UAE authorities have managed to implement social activity suspensions without severely affecting economic output.” 

In the near term, the UAE Central Bank’s AED100bn ($27bn) stimulus package for local banks and small- and medium-sized enterprises (SMEs) is also expected to benefit the local construction sector, the majority of which includes SMEs in the design, contracting and fit-out industries.

Foreman concludes: “It is not yet clear when the spread of COVID-19 will peak in the Middle East. This will largely determine the guidelines for social movement that health authorities implement over the next few weeks. For now, however, it is construction as usual in the UAE.”