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Infrastructure investors seek stable markets.

Qatar, UAE among top nations for infrastructure investment

DUBAI, May 3, 2016

Qatar and the UAE rank the second and third most attractive countries for infrastructure investment across the globe despite low oil prices hindering such investment, says a key report from Arcadis, a leading global design and consultancy firm.

Nations with secure business environments, stable financial sectors, and strong growth potentials still remain the most attractive markets for infrastructure investors, the report said.

The top 10 most attractive countries for long-term infrastructure investment in 2016 are: Singapore, Qatar, UAE, Canada, Malaysia, Norway, Sweden, US, UK and The Netherlands.

Sameer Daoud, Middle East leader, infrastructure, at Arcadis, said: “Priorities for Qatar include new systems for transportation and improving the country’s connectivity. A new port has been developed, in part, to support the import of materials needed to deliver ambitious spending plans that satisfy both the 2030 National Vision and the more immediate 2022 Fifa World Cup Qatar. Opportunities are more likely to be in the operation and maintenance of existing assets as the government continues to ensure that its infrastructure remains of a high standard.”

Despite infrastructure being a long-term investment, Arcadis’ third Global Infrastructure Investment Index also highlighted that short-term factors such as currency devaluations, commodity prices and security issues can be a barrier to investment.

Given these issues, nations such as the UAE, which has traditionally funded infrastructure through the public sector, is opening up to private finance, which could bridge the funding gap for the development of much-needed new infrastructure, including the extension of Dubai’s metro.

Ben Khan, Middle East client development director at Arcadis, added: “Infrastructure is an increasingly popular asset class for private sector investors, particularly in times of increased risk and uncertainty. Whilst opportunities have been limited in the region due to falling export revenues, as we see more GCC countries opening up to private finance, this can create opportunities for investors in the short to medium term.”

The report findings revealed that Saudi Arabia has dropped three places to 15th due to a decline in the relative size and dynamism of the market and the impact of relatively low infrastructure scores.

Daoud added: “Although we see a fall in Saudi Arabia’s ranking this year, there is much greater growth potential for the country in the future as the government recently announced its Vision 2030 reform plan, which reassesses its economic and social policies in a way that is designed to free the country from dependence on oil exports.”

The five main indicators for infrastructure investment attractiveness are:
•    Economy: GDP (gross domestic product) per capita, long-term GDP growth, gross fixed capital formation, investment forecast, domestic market size, household consumption;
•    Business: Ease of doing business, government regulations, transparency of policy making, prevalence of foreign ownership, legal framework efficiency, freedom from corruption;
•    Risk: Political terror scale, political instability, inflation, strength of investor protection, cooperation in labor employer relations;
•    Infrastructure: Quality of infrastructure, local supplier quality, ease of access to loans, global connectedness
•    Finance: Effect and extent of taxation, tax rate on profits, availability of financial services, financial credit rating, insurance

The Global Infrastructure Investment Index is published every two years and ranks 41 countries by their attractiveness to investors in infrastructure.  In order to gauge their appeal, the study looked at various issues including the ease of doing business in each market, tax rates, GDP per capita, government policy, the quality of the existing infrastructure and the availability of debt finance. Combining all of these factors provided a strong overview of the risk profile for each market and how attractive each one is likely to be to potential investors. - TradeArabia News Service

Tags: Qatar | UAE | investment | Infrastructure |

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