Doha: The value of new contract awards in the GCC could rise by 20 percent to $178bn, a new record for the region’s construction sector, MEED Insight Head, Ed James told the annual Arabian World Construction Summit in Dubai.
This compared with $147bn worth of contracts awarded in 2013, James said. In 2012, the value of contracts awarded in 2012 was under $120bn. “The near and long-term trend for the Middle East projects market is now highly positive following a great 2013 and an even better start to 2014,” James said.
Driving this growth are high oil prices, as well as strong economic and population growth. Although many political, security and bureaucratic issues remain, the project gap across key sectors outweighs the obstacles.
“Kuwait, Oman and Qatar could become significant growth markets. However, there is also likely to be more competition as more and more contractors enter the market, especially from Asia. Local contractors are also likely to ask for a guaranteed share of work as governments ramp up spending,” James added.
According to James, the GCC projects market could return to the 2006-08 heyday over the next five-seven years. “New contract awards in the GCC so far this year had already reached $60bn. The largest market for new contracts awarded in the first quarter of 2014 was Kuwait. This time, though, work will be spread more evenly across countries and sectors. This in turn will increase the spectre of cost escalation which may become a major problem,” continued James.
Alistair Kirk, industry expert and Middle East Head of Infrastructure at EC Harris said, “Key pieces of infrastructure stimulate wider economic growth and generate agglomeration benefits – from supporting urbanisation and industrial growth to providing stronger trade links. With the major construction boom expected in the region over the next 14 years, relevant industry data and research, pertaining to the infrastructure sector, is fundamental for industry
players.” The Peninsula
