GCC Construction Industry Outlook

The construction industry remains an important strength for the United Arab Emirates economy. Market studies have revealed a shift in the construction sector since 2015 and as a result it has slowed down over the last few years.

Despite the current climate, the construction industry remains optimistic. Government authorities in the Middle East region have been making efforts and creating positive changes within the market to improve the construction sector, attract foreign investment and new company setups in Dubai.

In 2017, the value of construction contracts awarded amounted to USD $108 billion for the GCC region.

Overall, the projects market has underperformed across different sectors and GCC countries except for Dubai. The real estate market is less reliant on the government budget for infrastructure projects, this motivates new entries in the market through various business setups.

Regional projects look solid with over USD $2 trillion currently in planning stages, showing there is still very much a need and demand in the construction industry.

The GCC is focusing on infrastructure projects such as: transportation and residential to create a more flexible environment for residents and visitors. Furthermore, this will enhance and entice investors to enter the GCC market and take advantage of these great investment opportunities. As a result, this will increase new business and lure those towards starting a company in Dubai.

Upcoming projects in the GCC are targeted to help boost the construction and tourism market and include:

• Expo 2020 Dubai UAE
• Saudi Vision 2030
• Abu Dhabi Economic Vision 2030
• Dubai Plan 2021
• Qatar National Vision 2030

Let’s take a closer look at the current construction projects for each GCC country in more detail.

UNITED ARAB EMIRATES

DUBAI

• Twenty one percent of 2018 budget was allocated to top infrastructure investments. Dubai is preparing for many constructions projects in the lead up Expo 2020. This will have a positive effect on the economy overall as new opportunities are created, entrepreneurs are becoming even more attracted towards establishing a business in Dubai and as a result there will be increased employment opportunities in the market.
• Dubai has many new projects in the pipeline such as expansion of Al Maktoum International Airport. The expansion plan will be executed in two phases over the next six to eight years. Once the expansion is complete the airport will be able to handle more than 220 million passengers a year. Construction on the first phase of airport expansion began in early 2017 and is expected to be completed by late 2018. Construction of the second phase will commence at the start 2020 and is estimated to be completed in 2022.
• Dubai Metro is in the expansion stage from Nakheel Harbour station to the upcoming Expo 2020 Dubai. Trial of the new Dubai Metro is expected to start in the fourth quarter of 2019, with passenger services due to begin on 20 May 2020, five months ahead of opening of the Dubai Expo 2020.

ABU DHABI

• Abu Dhabi’s main upcoming project is Abu Dhabi Metro. The entire Metro network will be 131 kilometers long and includes 18-kilometres underground Metro line. Phase 1 of the network should be complete by 2020. The opening date of Abu Dhabi Metro has yet to be declared.

SAUDI ARABIA

• Saudi Vision 2030 comes with the broad objectives to make the country free from their dependence on the oil sector. Saudi Arabia are planning for the privatization of the economy. The Kingdoms’ aim is to increase the current GDP from the private sector from 45% to 65%.
• Currently the country is driving towards privatization of many public entities within the healthcare, services, and energy sector. The purpose is to attract foreign investors to invest and tap into the market by starting a business in Saudi Arabia. With Saudi welcoming direct foreign investment, we expect many multinational corporation will take the opportunity to expand their business to the country and throughout the region.
• Saudi Arabia’s Public Investments Fund (PIF) is a sovereign wealth fund owned by KSA. This fund was founded for investing funds on behalf of Saudi Arabia’s Government. There are approximately 200 investments and 20 of these are listed on the Saudi Stock Exchange Tadawul. PIF provides medium and long-term loans to the large-scale government and private industrial projects. PIF is planning a project in the north western region – NEOM, which focuses on developing key economic sectors such as: biotech, energy, mobility and digital science which will boost the confidence of investors looking to do business in KSA.

KUWAIT

• Kuwait is focusing on construction and transport projects. Kuwait Metro has been approved with the main aim to improve and upgrade infrastructural facilities that will meet modern standards which will impact positively on the quality of life. There will be over 1,500 job opportunities at the operation stage and this project alone will significantly reduce the rate of traffic congestion throughout the city.
• Kuwait is considered as the financially strongest in the entire GCC region. Kuwait is focusing on public and private partnerships to bring privatization into the market and grow stronger with construction developments. Moreover, this will become an appealing market for foreign companies looking to expand to or setup a business in Kuwait.

BAHRAIN

• Bahrain’s Government is focusing on the construction of a Light Rail Transport (LRT) network in the country aiming to ease the traffic issues between the cities. The project is part of Bahrain’s Public Transport Masterplan 2030.
•  The project will include 105 kilometres of rail network, with 20 train stations including an airport station and is expected to carry 43,000 passengers per hour.
• LRT will be implemented in a phased manner and is expected to motivate people to expand and setup a business in Bahrain.

 OMAN

• Oman’s market is still relatively small however, recently the airport started its expansion plans to modify and add new facilities. Through this construction project Muscat International Airport will now have capacity to handle 12 million passengers per annum. The country is injecting more efforts to improve healthcare, education and tourism which is reflected in just some of the most recent construction tenders below.

Source www.venturesonsite.com

QATAR

• Qatar will be the first Arab State to host the FIFA World Cup in 2022. The construction projects are already in full swing including building: Lusail Stadium, Al khor, Al Wakrah, Al Rayyan, Khalifa International Stadium and Qatar Foundation Stadium. Qatar is focusing on the development of hotels, resorts and housing projects to host the visitors in the lead up to year 2022.
• Currently Doha Metro is under construction, it will have 4 lines with 85 stations. The operation of the Doha Metro will start in the year of 2019. Qatar is also working on the Metro Connection to and from the airport terminal which will provide flexibility to visitors and residents of Qatar.

Source: Protenders.com

As we can see the construction industry is on the rise. With the backing of GCC governments, more privatization projects, opening markets and the implementation of incentives for doing business within the region this is encouraging news for investors looking to enter the GCC market. We believe it will only be a matter of time before we see even more construction projects in the pipeline.