BMI View: Following the 2008 financial crisis, the UAE?s construction sector is gradually recovering with public investments now driving activity and picking up some of the slack left behind from the real estate slowdown. However, this time around we expect the scale of future projects to be moderated, to match more realistic demand expectations. Hence, we expect a leaner pipeline and do not anticipate any major flagship projects coming online during 2012.- Progress is being made on flagship multibillion dollar projects, such as the Dubai and Abu Dhabi international airports expansion, and the Jebel Ali and Etihad Rail. These projects sustain industry activity, though they are also seeing delays and downsizings, such as those seen at the Al Maktoom International Airport (Dubai).- The nuclear power project in Abu Dhabi is already being plagued by project cost inflation, even though it is still in the preliminary construction phase. The cost estimate has risen by US$10bn, taking the total to US$30bn, according to recent press reports citing unnamed sources close to the project. Financing will be overwhelmingly sovereign-backed and generated, with a small commercial loan aspect, according to preliminary reports.- However, while large-scale projects are ongoing, the pipeline for new mega-projects is very thin, with Etihad Rail the last of the big ticket projects on the agenda. We see this as being symptomatic of two things: 1) construction was going to always peak around 2013-2014, as many of the projects had a deadline to 2015; 2) with a tamer demand outlook over coming years, the new capacity coming online in transport and utilities may be enough to meet demand without major new expansions.- Data and estimates on the value of projects cancelled continue to surface. Citigroup estimates that since the beginning of 2009 to August 2011, a total of US$170bn of projects have been delayed or cancelled in the UAE, the majority of which have been in the real estate s

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BMI View: Enhanced oil recovery schemes and investment from both IOCs and NOCs underscore our bullish outlook for the UAE?s oil sector. The country will also retain its position as a key player in the region?s gas market, sustaining its role as a dual importer and exporter of natural gas. The opening of the ADCOP pipeline builds redundancy into the UAE?s oil export pipeline system, in the event of conflict affecting the Straits of Hormuz.We highlight the following trends and developments in the UAE?s oil and gas sector:- BMI sees proven oil reserves declining from 96.7bn barrels (bbl) in 2011 to just over 91bn bbl by 2016, with gas reserves also falling from 6trn cubic metres (tcm) to around 5.8tcm over the same period.- We see oil production rising to over 3.2mn barrels per day (b/d) by 2016 and nearly 3.5mn b/d by 2021, supported by re-development of mature fields, the deployment of enhanced oil recovery (EOR) and investment from IOCs and NOCs.- Gas production will get a big mid-decade boost from the start-up of the Shah sour gas project. By 2016, we see output of around 66bn cubic metres (bcm), rising to 74bcm by 2021.- The UAE will continue to export modest volumes of LNG while importing pipeline gas via Dolphin from Qatar. We have not factored a volume rise into either flow.- Liberalisation of fuel prices is unlikely in the short term, owing to the government largesse following political unrest across the Middle East and North Africa (MENA) region in 2011.Fuels distribution in the UAE will therefore remain a loss-making proposition. The UAE?s dependence on oil prices leads to high volatility in the country?s export revenues. Our assumptions of slower growth in China and uncertainty with regard to the eurozone debt crisis, clearly pose a threat to global oil demand. We assume OPEC basket oil prices of US$99.38/bbl in 2012, thus creating downside risk to the UAE?s macroeconomic outlook.

New York-listed Starwood Hotels & Resorts Worldwide Inc. (HOT) said it signed an agreement with United Arab Emirates-based conglomerate Al Habtoor Group to open three luxury hotels in Dubai.

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