The Impact of financial crisis on construction industry of United Arab Emirates

Acknowledgement

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Abstract

This paper supplies a strategic evaluation of the construction industry in the joined Arab Emirates (UAE). The foremost inquiries considered are: the structure and composition of the commerce, the strategic primary assemblies, the commerce tendencies, the life cycle, and a critical written test of the implication for scheme change after the 2007 economic market downturn. The implications for scheme change are examined utilising Porter's 5 Forces form and SWOT analysis.

Table of Contents

CHAPTER 1: INTRODUCTION6

Players' organisation6

CHAPTER 2: LITERATURE REVIEW10

Rising Asset Prices13

The Credit Boom14

While Interventions were required, authorities Need to Plan for an Exit14

Financial Architecture16

Financial Crisis Impact on the UAE Construction Industry18

CHAPTER 3: METHODOLOGY23

Competitive market23

Industry trends23

Industry life cycle24

SWOT26

CHAPTER 4: RESULTS27

Strategy change and competitive issues27

SWOT - UAE building industry28

Strengths28

Weaknesses28

Opportunities29

Threats29

Identification of strong players in the new competitive environment29

CHAPTER 5: CONSIDERATION AND CONCLUSIONS33

REFERENCES35

Chapter 1: Introduction

The UAE building commerce comprises a association amidst four major types of capital: industrial, commercial, financial and property. This configuration is structured by the strategies of the leading construction organisations. This article discusses the relationships between the major players and the resulting industry structure. The structure described in the item combines the national, industrial and financial environment specific to the UAE. Concerning statistics, the official UAE sources have to be addressed carefully because the construction industry is still emergent. Therefore, in this article, the environment is assessed based on statistics compiled by the International Monetary Fund and Oryx Middle East research team.

Players' organisation

The industry structure in the UAE is mainly shaped by the Joint Ventures (JVs) between foreign and local organisations. Local shareholders usually account for 51% of share capital, due to the 49% foreign ownership restriction in companies registered in the UAE. However, the distribution of profits is flexible and is not necessarily aligned with the percentage of ownership. JVs combine the benefits of both partners: a) The authority for enterprise administration and strategic conclusions is generally allotted to the experienced foreign business, which has the best knowledge and know-how, the capital to acquire the required market share, and a clientele groundwork from the international and localizedized arenas; and b) localized shareholders bring connections, contacts and a deep understanding of the specific situation of the UAE's market. These dominant firms set the rules of the game for product and site policies, pricing strategies, marketing approach, and construction standards and contracts.

Construction businesses may be classified in the following strategic groups:

Real land parcel developer (owner, purchaser, bank, fund),

Project manager,

Design and supervision consultants,

Design and built contractor,

Sub-contractor (specified, MEP),

Building components and services ...