By Staff www.emirates247.com
Despite grappling with challenges and delivery issues related to current projects, major opportunities in the construction sector remain prevalent in Saudi Arabia, Qatar, Abu Dhabi and Iraq in 2012, according to the newly released Deloitte Middle East’s annual report on the sector: ‘GCC Powers of Construction: Five Lessons to Learn From’.
Key findings in the Deloitte report indicate that large infrastructure projects, particularly around social and transport infrastructure, will offer tremendous opportunities for contractors, as will continuing upstream and downstream oil and gas related developments in the coming years.
Of the biggest investments currently underway is Qatar’s plan to spend $100 billion in preparation for hosting the 2022 World Cup and achieving its 2030 vision, and Saudi Arabia’s capital spend programme approaching $400 billion over the next 10 years alone. The Deloitte report indicates that although there are massive opportunities associated with huge construction spend, many project sponsors still have to deal with illiquid projects and debt.
“What primarily differentiates participants in the GCC’s construction industry from their Western counterparts is that grand opportunities continue to be capitalized upon across the region, despite being forced to deal with continuing negative financial circumstances – simultaneously – in specific locales,” said Rizwan Shah, Managing Director, Corporate Finance, and Leader of Deloitte’s Capital Projects Advisory services practice for the Middle East.
Backed by vast oil-based reserves and government stimulus packages, the economic prospects of the GCC region have remained positive despite ongoing political unrest in the wider Middle East region. As such, efforts to maintain a balanced and diversified economic base have remained the primary focus of the regional governments as evidenced by a steady stream of investments into construction and infrastructure developments. The Deloitte report indicates that there is at least an estimated $500 billion investment opportunity regionally, in energy, transportation, education, healthcare and other critical sectors of economic development.
The oil and gas exporting countries, such as Saudi Arabia, Qatar and Abu Dhabi, have an additional objective which is the need to diversify their economies away from the traditional petrochemical and hydrocarbon industries. This is also driving infrastructure spending in these countries. These countries are now looking at how to take advantage of existing strengths to develop upstream industries – and the focus has shifted to construction, according to the Deloitte report
“The region certainly is expected to continue to offer a lot of opportunity for contractors,” said Cynthia Corby, audit partner Deloitte Middle East and leader of the Construction industry for the UAE. More info