UAE desert booms, but builders face cash crunch
Citibank estimated earlier this year that there were already two thirds of a trillion dollars worth of construction projects underway in the UAE. That was before Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum unveiled models of the Mall of the World, a glassed-in city complete with an air-conditioned Times Square and Oxford Street and Earth’s biggest indoor theme park.
But beneath the soaring cranes and the glass and steel domes, all is not well for builders, who have found massive amounts of work but profit margins squeezed and developers slow to pay bills. And that means some of the glamorous new mega-projects may fall well behind schedule.
The UAE is recovering strongly from the 2008-2009 financial crisis which battered its real estate market. Local governments and state-linked firms have announced a slew of huge housing and infrastructure projects in the last 18 months.
But as some developers in Dubai and Abu Dhabi hold back payments, builders are now scrambling to obtain loans and digging into cash reserves for money to tackle the projects.