With the oil price stabilising and significant restructuring in the region either completed or well progressed, 2017 is already shaping up as a foundational year for Middle Eastern construction in the medium term, say a management team from UK-based international law firm, White & Case.
They noted that with the construction market in the Middle East revolved around the consequences of downward pressures on oil prices in 2016. The industry experienced a tough market and was characterised by restructuring, downsizing and an increase in disputes.
These factors, they feel, directly impacted the construction industry, with non-critical projects being modified, terminated or put on hold.
Although the trends of 2016 have carried through into Q1 2017, Q2 is expected to bring with it a clearer picture of the state of construction in the Middle East for the medium term.
Despite the expectation that the negative consequences of the low oil price on the ‘non-essential’ construction sector will endure, the appetite for ‘critical’ projects – particularly those tied to major events such as Dubai Expo 2020 and the 2022 FIFA World Cup in Doha – is expected to continue apace.
As these events close in, the tension between scheduling and budgetary pressures is expected to intensify, favouring contractors.
The experts also believe that with the new interest across the Middle East in PPPs as a form of procurement, opportunities may be created for contractors as well as for private investors in infrastructure.
Source: Construction News UK