Construction activity in the Middle East was broadly flat in the last quarter of 2020, but there are clear signs of growth in areas such as ICT and energy infrastructure, according to the latest RICS Global Construction Monitor.

 

The RICS Construction Activity Index for the Middle East and Africa was seen at -10% in Q4, up from -11% in Q3 and -40% in Q2. 

 

This indicates that whilst activity broadly flat, this is an improvement on the negative trends reported back in Q2, stated the expert.

 

Moreover, looking at a sector level reveals some areas of strength in terms of infrastructure activity, it added. 

 

A net balance of -34% of respondents in the Middle East and Africa said that their workloads in private residential fell in Q4, with -41% of respondents also reporting a fall in private non-residential. 

 

However, -1% of respondents saw a fall in infrastructure workloads, which is more or less flat, and looking at the sub-sectors, there was a rise in workloads in ICT and energy infrastructure, said the RICS report. 

 

Financial constraints continue to hold back activity in the last quarter, with 89% of respondents reporting this as an issue. Cost of materials and insufficient demand are also the main factors holding back activity, it added.  

 

According to RICS, professionals believe infrastructure will be at the forefront of the wider recovery of the sector over the next twelve months. 

 

Middle East experts also expect workloads in private residential and private non-residential to increase this year. 

 

Looking at headcount and profit margins, whilst a net balance of +7% of respondents expects to see a rise in headcount over the course of 2021, -6% of respondents expect profit margins to fall.  

 

Sean Ellison, Senior Economist, said: "The building blocks for recovery are being put into place, with construction activity growing once more on the back of concerted infrastructure investment and rising optimism."

 

"Despite the early signs of recovery challenges remain. Whilst construction will play a vital role in wider global economic recovery, the sector’s recovery is not yet entrenched – nor is it universal across countries," remarked Ellison. 

 

"With infrastructure a key driver in leading this bounce back, greater government spending will be vital. Many governments have committed to substantial infrastructure spending, bringing forward shovel-ready projects and we can expect more fiscal stimulus. How effectively this capital is put to use will dictate the speed of our recovery," he added.

 

Globally, infrastructure projects have been central to the construction sector’s return to growth. 

 

The RICS Global Construction Activity Index returned to positive territory in Q4. It rose to +3, signifying the market’s return growth, and up from -9 in Q3 and -24 in Q2.

 

The trend of modest growth was not uniform across all regions, however. The strongest results were seen in the Americas (+5) and APAC (+8), with respondents noting an increase in aggregate workloads.

 

However, there is a more mixed picture in Europe (-1) and MEA (-10), where sentiment in Spain, Turkey and South Africa was notably weaker.

 

Alan Muse, Sector Lead Building & Construction Standards, RICS: "Using effective and timely infrastructure stimulus measures to rejuvenate the economy is never straightforward. New build infrastructure schemes are invariably complex with long gestation periods."

 

"Concentrating on quick wins in the repair and maintenance of infrastructure may have a more immediate impact on the market and a quicker multiplier effect. In addition, fiscally constrained governments need to attract more private sector investment into this sector and de-risking projects through the application of standards to improve reporting, data collection and predictability is crucial," observed Muse.

 

"Transparent and prioritised pipelines of implementable design and construction work are key to attracting private sector investment from pension funds: comparing pipelines of projects on a common datum basis using ICMS and RICS standards will ensure a consistent and more meaningful approach," he added.-TradeArabia News Service