Sample Tourism Essay on The Construction Industry Sector in Dubai

The Construction Industry Sector in Dubai

            The construction industry sector in Dubai comprises commercial, residential, and other buildings that accounts for close to 50 per cent of the total projects in the economy. The construction industry is the fifth largest sector in the economy accounting for 8.4 per cent of the overall GDP of the economy in 2014. The current level of construction sector is favorable, as the sector has benefited heavily from the massive expansion in the transport and hospitality sectors in the economy (Aljassmi and Han 2014, p.176). Based on the economy’s tourism strategy, Dubai aims at attracting close to 20 million visitors to the emirates that is double the current amount of visitors. In order to achieve this substantial growth, both the transport and hotel infrastructure are likely to expand largely. 

            The quality of infrastructure and construction in Dubai was ranked 12th out of 144 countries ranked by Global Competitiveness Report. This reflects the nature and capability of the economy’s construction sector to promote economic growth and performance. Thus, investors have expanded opportunities in the construction sector due to the gaining momentum of the sector in Dubai. In the first quarter, the combined growth of the construction and real estate in Dubai grew to 41.9 per cent in 2014 from 8.7 per cent in 2013.

 The Dubai government has shown its commitment towards economic diversification and the provision of favorable factors for investments. A strong construction sector is useful in ensuring a stable economic development. The economy’s rapid growth, high level of urbanization, and young generation will continue to support the demand for leisure, infrastructure, and real estate sectors among others. Therefore, the government support and intervention has been instrumental in supporting the construction industry in Dubai.

However, the construction industry in Dubai faces various risks including global finance crisis, hot weather, and type of topography. Global financial crisis defines the general situation of economic downturn that reduces the ability of the investors to afford bank mortgages. The global financial crisis could lead to high land prices and increased costs of resources. This makes difficult to invest in the construction and real estate sectors in the economy (Hoonakker, Carayon and Loushine 2010, p.957). In some instances, the extreme hot weather situations make it difficult for the construction workers to cope and work under the climatic situations. Dubai experiences extreme hot seasons that create uncertainties and risks on the future of the construction projects. For example, dust related diseases usually prevent the smooth construction and development of projects in Dubai. Most importantly, the continued growth in the construction projects in Dubai pushed prices for construction materials and labor higher for future periods.

In spite of all, the continued growth of the GCCC markets including Qatar presents stiff competition to Dubai in obtaining resources from its neighboring countries. Legal risks are also prevalent in Dubai due to the risks of fraudulent purchase of land without the relevant documentations. The legal risks affect the construction industry due to the failure of the government to develop effective processes of land regulation (Abdelsalam and Gad, 2009, p.506). Thus, land and property ownership agencies should follow the expected regulations and laws to avoid any potential risks. In addition, the shallow coastal plan in Dubai characterized with rugged mountains is another major risk to the construction industry in Dubai. These risks can be prevented through implementing effective risk prevention programs to promote the success of the construction industry in Dubai.

References

Abdelsalam, H. M. and Gad, M. M., 2009. Cost of quality in Dubai: An analytical case study of residential construction projects. International journal of project management, 27(5), 501-511.

Aljassmi, H. A. and Han, S., 2014. Classification and occurrence of defective acts in residential construction projects. Journal of Civil Engineering and Management, 20(2), 175-185.

Hoonakker, P., Carayon, P. and Loushine, T., 2010. Barriers and benefits of quality management in the construction industry: An empirical study. Total Quality Management, 21(9), 953-969.