The GCC is building one heck of a construction market with its $1.3 trillion value forecasted to grow
The GCC civil construction market has returned to growth with a total $59 billion in contracts awarded last year, a level not seen since 2008, according to MEED Insight’s GCC Construction Report 2014.
Historically, MEED Insight says the civil construction market has been the largest sector in the GCC projects, driven mainly by booming economies and populations in the UAE, Saudi Arabia and Qatar. “These markets are investing billions of dollars to create new or upgrade existing infrastructure,” said Ed James, the Head of MEED Insight, the strategic consultancy arm of the MEED business.
Other key factors which have driven this growth include high oil prices and strong population growth. “None of these drivers is expected to change dramatically in the medium term,” he said.
Excluding schemes on hold or cancelled, the report estimates the current value of live civil construction projects to be just over $1.3trillion, with $935 billion in execution including long-term megaprojects, $81 billion out to tender, $211 billion in design phases and $136 billion under study.
“While new contract awards are a big boost to the economy, completed projects are the ones that ultimately the most significant impact on regional economies,” said Becky Crayman, Head of Awards, MEED, organizers of the annual MEED Quality Awards for Projects, in association with Mashreq, which has been recognizing completed projects throughout the region for the past four years.
Saudi Arabia is the region’s largest civil construction market by value of work under way, with $81 billion in contracts under construction. The UAE has $66 billion worth and Qatar $32 billion. Kuwait, Oman and Bahrain remain small civil construction markets in comparison to their GCC neighbors. Both Kuwait and Oman have the potential, however, to increase the value of construction deals by harnessing their private sectors. There are indicators that both could become major markets if they adopt the right policies and strategies.
Looking ahead to the rest of 2014, MEED Insight forecast an increase in the region’s overall projects market, with significant country variation. “The margin between Saudi Arabia and the UAE is expected to narrow as contract awards in the Kingdom slow while those in the federation quicken on the back of a revitalized Dubai real estate sector and the emirate’s preparations for the World Expo 2020. The overall forecast for the year is for $68 billion worth of civil construction contract awards,” James noted.
For its 2014 edition, the awards program will once again recognize quality projects across several categories, including Oil & Gas Project of the Year, Industrial Project of the Year, Power and Water Desalination Project of the Year, Water Reuse Project of the Year, Leisure and Tourism Project of the Year, Transport Project of the Year, Social Project of the Year, Building Project of the Year, Sustainable Project of the Year and Award for Innovation. Projects completed between January 2012 and December 2013 are eligible to join the program, with deadline for submission of entries set on Jan. 31, 2014.
As in the past years, competition has been tough with mega projects throughout the GCC vying for the prestige and honor of being named the best of the best in the region. Some of the past winners of the sought after MEED Quality Project of the Year award include Dubai’s Burj Khalifa (2011 winner), the worlds’ tallest building, Qatar’s Pearl GTL project (2012), and Concourse A – Dubai International Airport (2013).
“The completed projects have a special significance – they are the foundation on which Gulf economies are building progressive and sustainable societies for current and future generations to enjoy. For this reason, we look at each project not just from an economic perspective, but also in terms of how they have ingeniously used innovative technologies, incorporated vital ecological measures, and generated local employment, among other important factors,” Crayman added.
The MEED Quality Awards for Projects, in association with Mashreq, is the only awards program in the GCC that evaluates the outcome of the construction process, rather than the process itself.