Pakistani News

JEDDAH: Saudi Arabia, which currently has a 38 percent share of the total construction projects in the region, is expected to award contracts worth $86 billion in 2011, according to a newly-released "GCC Powers of Construction 2010" by Deloitte Middle East.

Currently the Kingdom has $624 billion worth of projects planned or underway, it said.

Saudi, Abu Dhabi and Qatar continue to be the GCC markets harboring greatest potential for the construction industry, the report noted.

"The UAE has 36 percent of total construction projects, worth $958 billion, and is expected to see its construction industry grow by a compound annual growth rate (CAGR) of 9.6 per cent from 2010 to 2014."
Qatar, with a smaller 15 percent of total construction projects, is estimated to see its construction industry grow by a CAGR of 12 per cent over the same period, the Deloitte report said.

In a separate report by UAE-based Proleads Global market research company, it said demand for construction in the Middle East is set to soar as the industry recovers from the economic downturn and the region forges ahead with major development.

The report noted that nearly 1,300 projects valued at more than $418 billion are under construction in the UAE alone, with an additional 303 projects worth $143 billion in the design, planning or bidding stage.
A study released by the Dubai Chamber of Commerce and Industry in August noted that the UAE is still the largest construction market in the GCC with $714.8 billion worth of projects in progress or in the planning stages.

Abu Dhabi, which has a less developed transport infrastructure than Dubai and suffers chronic congestion problems, is expected to spend $68 billion from 2010 to 2015 on public transport alone.

Government spending on infrastructure projects is also giving the sector a considerable boost. The UAE government earmarked almost $12 billion from the 2010 budget for infrastructure projects, according to Business Monitor International.

"In this year's 'GCC Powers of Construction' report we can see a continuation of many of the trends that were born out of the global financial crisis," said Omar Fahoum, Deloitte Middle East chairman and chief executive.

"Prime among these has been the role of government in injecting funds in a bid to stimulate their economies. These funds are being used to target infrastructure and sustainable development, thereby directly benefiting the construction sector," he added.

As well as providing an overview of each GCC market, the report explores some of the thornier issues affecting the industry.

"This year has been challenging for the GCC construction sector," said Cynthia Corby, audit partner and construction industry leader at Deloitte in the UAE.

"Contractors have had to face suspended or canceled projects while coping with increased competition for new tenders. In the key markets of Saudi, Abu Dhabi and Qatar, this competition has been further sharpened by the entrance of international contractors looking for new opportunities," she added.

Saudi Arabia allocated $3.17 billion in its 2010 budget for construction of 6,400 kilometers of roads. More than $14 billion worth of construction contracts were awarded in the GCC during April and May, with around $8.7 billion awarded in the UAE, According to Ventures Middle East, Ventures Middle East said.

The firm has also forecast 10 to 15 percent growth in contracts awarded in 2010.

With more than $1.3 trillion projects on the horizon in the GCC, manufacturers and suppliers of plant, machinery and construction vehicles will have an excellent opportunity to capitalize on Middle East construction growth.

Dr Nasser Hamad Al Hajeri, chairman of Gulf Automobile Industry Corp, said the scale and number of development projects, particularly in Saudi Arabia, will increase demand for construction machinery.