Middle East will be the fastest growing construction market in the world

January 22, 2017

undefinedThe firm has published a paper on the MENA infrastructure sector in which it argues that buoyant markets in the UAE, Qatar, Oman and Egypt will power 6% overall growth in the Middle East in 2017, up from 5.3% last year, according to a report in The National.

"This outpaces long-time leading region sub-Saharan Africa, which will take longer to recover from the end of the commodity price super-cycle and struggles comparatively to MENA in attracting foreign investment in real estate and infrastructure," the report was quoted.

It argued that the recent improvement in oil prices "will allow for governments to firm up spending plans" following several years of uncertainty in which projects were either placed on hold or cut.

It also said the UAE would reclaim its crown as the biggest projects market in the region from Saudi Arabia for the first time since 2012, mainly due to budgetary constraints in the kingdom.

"We note that it will be 2020 before Saudi Arabia again overtakes the UAE as the largest construction market in the MENA region," the report said.

Mike Collings, Middle East Managing Director of project management firm Turner & Townsend argued that BMI’s forecast seemed slightly over-optimistic – especially in terms of a forecast of 12% growth for Qatar’s construction market, as 2017 becomes the ‘peak year" for contract awards in the run-up to the FIFA 2022 World Cup.

"Qatar needs to stimulate growth it if it is going to deliver all it needs to make an absolute success of 2022," said Mr Collings.

He also argued that the UAE remains a "split" market, with rationalisations still taking place at a number of government-run entities in Abu Dhabi. Dubai is enjoying strong growth as a result of major developers looking to get projects awarded ahead of Expo 2020.

"To use a footballing analogy, I anticipate this being like a game of two halves. I certainly don’t think the increase in oil prices we have seen to date has been a panacea, but I do think that if the oil price starts to stabilise above $50 a barrel, it will create confidence.

He predicts that the marketplace will gain more confidence in Q2, after which the market could see an improvement.

David Clifton, Business Development Director at Faithful + Gould, agreed. His firm is forecasting a 5% increase in contract awards in the UAE this year, despite a softening of real estate prices, which is placing pressure on some mixed-use private sector projects.

He also said that the Abu Dhabi market is likely to remain "slow", but added that in Q4 2016 there was a pick-up in tender activity, which should lead to a growth in project awards in Q1 this year.

Bishoy Azmy, Chief Executive of Al Shafar General Contracting, said: "I’m quite optimistic for 2017. I think the government of Dubai, particularly, has been adamant to ensure there is no slowdown or negative headwinds in the region. The government is proceeding with significant infrastructure investments and major developers are also launching one project after the other. I see activity on both fronts. But so far, on Abu Dhabi, it’s very quiet."

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