GCC – The construction market showed relative resilience in its performance, depicting a 30% pick-up in 2017-to-date, according to a new study by MENA Research Partners (MRP), a leading research company in the region. With total GCC active projects at around $2.6trn– equivalent to 160% of GDP, the regional construction market presents sufficient depth and opportunities for investors and regional market participants over the years to come.
Despite recent years’ headwinds that extended from oil price slump to budget adjustments in many GCC countries, the region witnessed $130bn of completed projects during 2017, versus $100bn for the full-year in 2016. Such numbers remain at par with an annual average of $135bn during the 2009-2014 period.
Anthony Hobeika, Chief Executive Officer at MRP, said: “This surge is driven by economic diversification away from hydrocarbons in leading GCC countries, with a particular focus on sectors like transportation, power and water, manufacturing and energy projects totaling in excess of $1trn of projects in the pipeline, along with a shift from oil into renewables where many GCC countries have set ambitious targets to expand their alternative energy generation.
Governments remain the key drivers of construction activity, as part of their firm commitment to long-term sustainable economic development. Looking at the recent project announcements, their main focus has been on large scale strategic developments, like flagship real estate projects, energy, and airports, among others. In return, the role of private sector has been on a rapid upward trajectory, primarily targeting consumer-driven sectors like retail, logistics and industrials. Governments and the private sector are turning into trusted partners within the construction sector.
Among rising trends, tourism and leisure-related projects are increasingly viewed as strategic emerging sectors that many countries are looking to tap into, with many regional countries now aiming to become key entertainment and cultural destinations for domestic and foreign tourists.”
The UAE and Saudi Arabia account jointly for 70% of the value of active projects, both countries increasingly present compelling new opportunities for investors and market participants and remain key markets.
Hobeika concluded saying: “The outlook for construction market remains compelling but we witness a shift in terms of sectors and focus areas. While many segments like real estate seem cyclical, other developments linked to strategic and long-term orientations of governments in terms of economic expansion will definitely present the next wave of opportunities for specialist contractors in the GCC region.”