The fortunes of the home automation market depend to a large extent on construction and development, and in building terms Middle Eastern cities like Dubai have been the great success stories of recent years.

In 2008, Gulf News reported that the value of land transactions in the emirate shot up nearly 48%, with 11.6 billion dirhams (US$3.16 billion) changing hands in the month of May alone.

But since then the global economic situation has changed dramatically, with the subprime credit crunch in the United States and financial instability around the world.

Cities like Dubai and Abu Dhabi have thrived on foreign investment over the past few years, so there is justifiable concern about how the global situation will affect these markets.

In Dubai, predictions are that the largely expatriate population will shrink over the next two years as the troubled real estate and construction sectors cause immigrant numbers to slow and many people to leave.

Over half of Dubai’s population is employed in the real estate and construction industries, which are suffering from a lack of financing.

A report featured in the Financial Times of Britain predicts that this will cause the number of residents in the emirate to decline by 8% in 2009 and 2% in 2010. Correspondingly, property prices fell 8% in the last quarter of 2008.

Jordan, one of the few countries in the region reliant on foreign oil, faced the additional problem of soaring fuel costs in 2008 – something its oil-rich neighbours did not have to contend with. Needless to say, the easing oil price since last year has not helped most of the surrounding countries.

In Kuwait, spending will be reduced in the forthcoming fiscal year in an effort to curb the crisis, and the Arab Economic Unity Council is meeting to discuss the establishment of an emergency fund to support Arab financial institutions.

Dubai property development giant Nakheel is in talks with banks to devise finance packages for sub-developers. It is also working on new payment plans for island owners struggling to fund their investments as a result of the global financial crisis.

Further, reports that the company has had to shelve its plans for the world’s tallest building are not helping to create market confidence in the Dubai construction industry.

But it is not all doom and gloom. Speculators may be backing out of deals on off-plan properties, but there is no indication that end-users are leaving the market – and end-users are the primary concern of the home automation industry.

There are also reasons why the region is well placed to survive the economic downturn.

First, commentators predict that wealthy overseas Arabs will pull out of unstable foreign investments and bring their money home.

Second, unlike many Western countries, UAE and other Arab nations are creditors rather than debtors, with the UAE Government pumping billions into its banking sector to improve local liquidity and shield its economy.

“The global crisis has affected the financial market in the region and the real estate business, of course,” says Techno Q executive director Abdulla Alansari.

“But we should consider that Qatar is a relatively small country, with a population of about 1.5 million people and one of the largest natural gas reserves worldwide. The most recent GDP growth forecast for 2009 is about 9% and this gives us an excellent outlook.

“The confidence among the nationals is still good, and we are confident we will have the opportunity to keep growing next year.”

That being said, the industry as a whole has had to make some sacrifices.

Although the exhibition industry in the Gulf Co-operation Council region remains strong, Integrated Systems Events (ISE) and UBMI UAE Jersey Limited have announced the postponement of the inaugural Integrated Systems Middle East Africa (ISMEA) trade show.

Originally scheduled to be held on 23–24 March 2009 at the Abu Dhabi Exhibition Centre, the show will now be staged at a later date.

“We had a tremendous response from the audio-visual and electronic systems industry to our plans to launch an event in this region,” ISE managing director Mike Blackman says.

“However, in the light of trading conditions, some of our key exhibitors had raised concerns about the timing of the event.

“We have always listened closely to the advice of our industry and tried to tailor our events to suit its needs, and we believe that postponement is the best option for all of us at this time.”

UBMI UAE Jersey Limited event director Kent Daniels says that making this decision now secures the future of the ISMEA show as the region’s only business-to-business event dedicated to professional AV and electronic systems integration.

Mike reaffirms the commitment of both partners to developing the market for AV products and services in the region.

“The postponement does not in any way undermine our belief that this market deserves its own, highly focused trade show and associated education program.”

News of the postponement comes just months after CES Hometech was suspended for 2009.

“The global economic situation is bound to have a profound impact on the Gulf region, and the UAE in particular,” says CEDIA International Council member and Archimedia chief operating officer Omar Hikal.

“As real estate development and economic growth slow, we will definitely see a softening demand for our high-end systems, and this will likely last into 2010.

“Many consumers are postponing investment in sophisticated systems, or cutting back on how much they were planning to spend. Fortunately, we are well positioned to weather the storm, and we are continuing our growth throughout the region in preparation for when the inevitable market stabilisation comes.

“The key has been to redouble our efforts and continue to work hard to promote our business, and to focus our efforts on delivering world-class solutions that will keep customers coming even through this economic downturn.”

Ultimately, very few in the industry are outwardly pessimistic about the future of the industry. Most installers are simply using the opportunity to follow up with previous clients or move into the retrofit and renovation market.