The regional construction market has remained resilient, showing a 30 per cent increase in 2017-to-date, according to a new study by Mena Research Partners (MRP), a leading research company in the region.
With total Gulf Cooperation Council (GCC) active projects valued at some $2.6 trillion — equivalent to 160 per cent of gross domestic product (GDP) — the regional construction market presents sufficient depth and opportunities for investors and regional market participants for the years to come.
Despite the recent years’ headwinds that extended from the slump in oil prices to budget adjustments in many GCC countries, the region witnessed $130 billion in completed projects during 2017, versus $100 billion during the entire 2016. Such numbers remain at par, with an annual average of $135 billion during the 2009-2014 period.
“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 $1 trillion 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,” said Anthony Hobeika, Chief Executive Officer at Mena Research Partners.
Among rising trends, tourism and leisure-related projects are increasingly viewed as strategic new emerging sectors that many countries are looking to tap into, with regional countries now aiming to become key entertainment and cultural destinations for domestic and foreign tourists.”
The UAE and Saudi Arabia jointly account for 70 per cent of the value of active projects, as both countries increasingly present compelling new opportunities for investors and market participants, and remain key markets. As they lead economic growth, and driven by young and fast-growing demographics, in addition to long-term transformational plans with Saudi Vision 2030 and the UAE Vision 2021, GCC governments have been promoting many significant infrastructure projects that aim to catalyse business activities in specific sectors.
Hobeika added, “The outlook for the construction market remains compelling, but we have witnessed a shift, in terms of sectors and focus areas. While many segments like real estate seem cyclical, other developments linked to the 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.”