Demand
and investment in infrastructure construction projects across the GCC continues
to show robust growth as regional governments look to diversify economies away
from their rich oil and energy sectors.
The Middle East is expected to spend over $4
trillion on infrastructure in the next decade, which means vast and
significant opportunities for companies providing construction services,
materials, equipment, logistics, man power and consultancy.
In
this blog post, I’ve collated a snap shot of each GCC country’s strengths and
opportunities in the construction sector, together with an overview of the
largest projects currently underway and forecast. A breakdown of projects by
sector is also highlighted.
UAE
Strengths
•
Government-supported infrastructure spending in transport and utilities will
intensify as a means of diversifying the economy away from oil, in addition to
keeping the population quiescent at a time of wider unrest.
•
A clear regulatory environment and the governing of private investments in
infrastructure create a favourable investment climate.
•
State-owned utilities (ADEWA, DEWA) are willing to take on majority equity
stakes in projects and provide government guarantees in a bid to attract
investors.
UAE
Opportunities
•
The decline in cement and steel prices in the region reduces the cost of new
projects.
•
The construction industry remains one of the largest sectors in the UAE, after
oil & gas, as the country tries to transform its oil-dependent economy by
spending billions of dollars on its infrastructure and tourism sectors.
•
Government willingness in Dubai and Abu Dhabi to allow private participation in
infrastructure still appears high.
•
The UAE is becoming a hub for renewables and green tech, with Masdar
spearheading new ventures.
KSA
Strengths
•
Saudi Arabia has the largest construction sector in the Middle East. Alongside
active government spending, efforts are also being made to increase private
investment. Government-led activity boosted by oil windfalls is driving demand
in the construction industry.
•
The Ninth Development Plan for the Kingdom of Saudi Arabia sets out plans to
invest SAR 1,444bn (US$385bn) in social and economic infrastructure between
2010 and 2014.
•
The total value of contracts issued in the Kingdom's construction sector grew
by 50% year-on-year in H212 (following a 140% y-o-y increase in awards during
2011).
KSA
Opportunities
•
The number of ongoing mega-projects means that many multinational firms have a
presence in the country.
•
Increasing private investment should provide opportunities for large foreign
contractors to increase their involvement in the country.
•
As other construction industries in the Gulf stagnate, construction companies
look to Saudi Arabia for opportunities.
•
Saudi Arabia remains a 'construction safe heaven' amid both wider political and
financial turmoil.
Qatar
Strengths
•
Construction of large-scale transport infrastructure projects is under way - a
move that will ease the strain on existing infrastructure.
•
A number of international companies operate in the country, which is open to
international private sector involvement.
Qatar
Opportunities
•
Qatar is developing its non-oil sector, thereby supporting infrastructure
development.
•
Hosting the FIFA 2022 World Cup should yield considerable contracts across the
construction and infrastructure sectors.
Kuwait
Strengths
•
With large oil reserves, Kuwait has a significant cushion to weather economic
difficulties.
•
The country has been generating surpluses for a number of years, meaning it has
financing available for large projects.
•
USD 12.6bn infrastructure investment will further boost development and growth.
•
Tighter integration with neighboring states makes Kuwait a more enticing
investment prospect.
•
Kuwait has a strong country structure and Kuwaiti firms have considerable
infrastructure and construction expertise.
Kuwait
Opportunities
•
The tight integration of infrastructure development between Gulf states
throughout the GCC provides opportunities for Kuwaiti firms to win contracts in
the region.
•
The Al-Zour refinery project appears to be back on track, offering
opportunities for both energy infrastructure and wider construction projects.
•
The government's continuing support for infrastructure stimulus provides
opportunities for developments. Improvements in power and transmission systems
are particularly beneficial for sustained growth.
Oman
Strengths
The
government’s strategy to diversify away from oil is well under way and is
helping to drive infrastructure and tourism development.
•
The government is keen to attract the private sector, including foreign
companies, and has a strong market orientation.
Oman
Opportunities
•
Growing tourism and transport infrastructure offer opportunities for developers
and new business in the country.
•
Diversification of the economy will lead to a number of construction contracts
and investment into accompanying infrastructure.
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