Infrastructure spend is expected to boost growth in the UAE economy over the next two years as the drive for diversification ramps up, a new report by BMI Research revealed this week.
Largely driven by construction activity in the lead-up to Expo 2020 Dubai, the non-oil sector has seen steady growth in the last few years, especially as more leisure and hospitality projects come to the fore.
The BMI report highlighted the economic impact of the non-oil segment in the coming years, as well as the boost that spending on major infrastructure projects will give to the UAE’s real gross domestic product (GDP). In fact, the research consultancy forecasts real GDP growth of 8.9% in 2018 and 9.7% in 2019, indicating that reliance on oil has waned and that the government is on its way to achieving its target of diversifying away from oil.
Dubai’s construction sector is expected to be a key growth driver in this regard, with the development of themed districts, hotels, and entertainment parks picking up pace until 2020.
Though BMI predicts that the UAE will continue to face difficulties as a result of oil prices, diversification efforts are finally bearing fruit, even in the formerly oil-dependent economy of Abu Dhabi.
Yas Island developer Miral, for instance, is completing two entertainment projects on the island later this year, including the Warner Bros theme park and Clymb, an indoor rock-climbing facility. Miral said last year that it aims to make Yas Island one of the top 10 leisure destinations in the world by 2022, an ambitious goal that it seems is quickly turning into a reality.
Experts seem to agree, as vice president of themed entertainment project management at Cumming Corporation, Matthew Priddy, told Construction Week last month that he believes the themed entertainment sector in the region is growing at a rapid pace.
“This is evident by what you see going on in Abu Dhabi, on Yas Island, as well as what’s going on here in Dubai,” Priddy explained, adding that countries like Saudi Arabia and Jordan have also expressed interest in themed destinations.
Other emirates have similarly focused on the leisure market as a way to spur economic growth, introducing expansive waterfront developments and resorts to promote investment in their tourism sectors.
As an example, restaurant consultancy Restaurant Secrets Inc (RSI) announced last month that it is set to launch Funoon District, a project that is under development in Sharjah. Like many leisure developments that are taking shape across the UAE, this project will provide a fully integrated dining and entertainment destination. It will host more than 20 food trucks, kiosks, restaurants, and cafés, and aims to promote UAE home-grown brands.
While the pursuit of diversification has been unrelenting – and is expected to continue at a steady pace – analysts are optimistic that past efforts and investments will pay off this year, allaying concerns of reduced spending any time soon.