GCC contract awards to hit $178bn in 2014
Dubai, May 13, 2014
The value of new contract awards in the GCC region is likely to rise by 20 per cent to $178 billion in 2014 compared to $147 billion contracts awarded last year, said an industry expert.
This is a new record for the region’s construction sector, stated Ed James, the head of MEED Insight at the annual Arabian World Construction Summit being held at the Sofitel Hotel on Palm Jumeirah. In 2012, the value of contracts awarded was under $120 billion.
According to him, the growth was mainly driven by high oil prices, as well as strong economic and population boom. Although many political, security and bureaucratic issues remain, the project gap across key sectors outweighs the obstacles, he added.
“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 while addressing the gathering at the three-day event.
“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,” noted James.
James pointed out that the GCC projects market could return to the 2006-2008 heyday over the next 5 to 7 years.
"New contract awards in the GCC so far this year had already reached $60 billion. The largest market for new contracts awarded in the first quarter was Kuwait. This time, though, work will be spread more evenly across countries and sectors," said the expert.
This in turn will increase the spectre of cost escalation which may become a major problem, he added.
Meanwhile, Alistair Kirk, the 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," he observed.
“Highlighted within the 2014 Global Infrastructure Investment Index (GIII), the UAE and Qatar are highly ranked among the world’s 40 most dynamic countries with greatest potential for growth and investment in infrastructure. The analysis reveals insights into the peculiarities and opportunities in these countries, showcasing areas for long-term growth, financial risks and financial investor prospects,” he added.
EC Harris’ GIII report is expected to launch regionally this quarter to further support the regions’ infrastructure mega projects.-TradeArabia News Service