Middle East projects market to see flat growth in 2012
- Middle East: Thursday, September 27 - 2012 at 15:06
Following a subpar year in 2011, the Middle East projects market is forecast to remain flat in 2012, largely due to a drop in activity in Saudi Arabia, according to a new report by MEED Insight.
Although Saudi Arabia continued to do well last year and hit $76bn worth of contracts awarded, a slump in activity in Abu Dhabi led to a sharp fall in contracts awarded in the UAE and served as the main cause for the low overall regional figure in 2011.
MEED Insight's forecast for the region in 2012 is for flat growth and a repeat of the 2011 $130bn figure, although there may be some increase in activity in 2013.
The Qatari market is expected to grow to $18bn this year on the back of the start of the investment drive in the required World Cup infrastructure. However, this acceleration has not been as quick or rapid as expected and the real impact will only be felt from 2013 onwards, the report noted.
The UAE market is also expected to see an increase in contracts awarded compared to 2011 due to a return to some activity in Abu Dhabi and confidence slowly returning to Dubai. Nonetheless, the dizzy heights experienced in the 2006-08 period are unlikely to be repeated.
The main factor weighing down the region is the slowdown in Saudi Arabia, which is forecast to suffer a drop in the value of contract awards to $68bn, mainly due to bureaucratic issues and challenges in project delivery.
Although the market faces challenges, the main drivers for project development in the GCC continue to be a combination of high oil prices, demographic and economic growth, and a political commitment to invest in domestic infrastructure. Far from having a negative impact on projects development, the on-going political unrest in the region is acting as a stimulant for the increased and more rapid project delivery, as governments move to head off discontent by enhancing social infrastructure investment. The $100bn plan to build 500,000 houses for local nationals, announced by King Abdullah in March 2011, is a good example of this, the report noted.
Included in the 100+-page report are rankings of the top projects, sectors, contractors and clients, as well as an analysis of materials and labour costs.
Click here to order a copy of the report.
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