Pinsent Masons’ GCC construction survey reveals improved sentiment towards market conditions

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Doha — Overall sentiment in the GCC’s construction sector has improved by approximately 7% (from 32% per cent to 39%), according to recent findings from Pinsent Masons’ GCC Construction Survey.

Presented to industry professionals at the Construction and Engineering Law Conference, the report provides a snapshot of opinion from the GCC construction sector where majority of the companies are involved in projects with a value of over AED 500mn, despite ongoing concerns relating to delayed payment, the rising cost of capital and increased number of disputes.

The survey reveals that 16% of respondents believe that Qatar will provide the strongest opportunities for growth in 2018, bringing its overall ranking to third place in the GCC region.

Peter Blackmore, Head of Pinsent Masons Qatar, said, “There is more optimism about improved market conditions in the GCC construction sector than we saw in 2016, though there are ongoing challenges with lower energy prices. However, in Qatar we expect activity levels to improve in the lead up to FIFA World Cup 2022.”

While the survey indicates a slight rise in overall sentiment, the findings revealed that 20% of those surveyed across GCC expect their order books to decline by more than 10% in the coming months, compared to 16% two years earlier. Asked about contract conditions, 86% of businesses said they had become less favourable during 2017, representing a similar sentiment in 2016 which stood at 92%. In addition, a significant number of companies (86%) said payment periods were longer in 2017 compared to same time last year. Finally, 67% of respondents stated they were involved in more disputes during 2017 than had been expected before the year started, as opposed to 59 per cent in 2015.

“Whilst analysts predict a slight economic revival across many GCC markets during 2018, the survey results are indicative of what has been a challenging time for construction sector – which has grappled with impact of lower oil prices and ongoing geopolitical tensions,” added Sachin Kerur, Head of Middle East Pinsent Masons.

In terms of sector types, close to 60% of respondents believe power (including renewables) will offer the most opportunities during 2018. Meanwhile, sentiment towards the real estate sector improved with 32% of respondents expecting growth from this sector in 2018, compared to 25% in 2016.

With Public Private Partnerships (PPPs) increasingly being used as a means of attracting more inward investment – especially in Qatar, which is planning to implement a new law governing use of PPPs – the survey revealed that more than one third (40%) of respondents across the GCC are currently involved or expect to be involved in PPP projects during the next 12 months, up slightly from 32% for 2016.

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