GCC construction deals set to hit $150bn

The GCC construction industry will witness a pick-up in project activity towards the second half of the year until 2013 with contract awards reaching a high of $150bn, according to experts. Based on the research by Ed James, head of MEED Insights, there will be an acceleration of project spending in the Saudi market. Last year, the Saudi government awarded close to $70bn in signed contracts, more than all the other GCC states combined, and is expected to increase expenditure as part of its ninth development plan. "Additional spending announcements following the region's unrest, the kingdom's projects market can only grow in the short to medium term," James said. The research, presented at the recently concluded Arabian World Construction Summit 2012, also showed Qatar should start to see an upsurge in spending as its World Cup plan gains momentum. The research also said it could be a pivotal year for Kuwait with many projects due to be awarded as well as the $30bn downstream refining programme. The UAE construction market cannot decrease much further and should start to rise again, it added. "In 2010, 229 projects due to be awarded were cancelled; this number fell to 137 in 2011. It is down to 109 this year and is set to drop to about 30 in 2013 as developers commit to more commercially viable schemes," said James. An expected surge in project activity is also expected in Iraq, as the IOC field concessions result in upstream spending and the political and security situation improves to allow for greater infrastructure investment. Mohammed Al Derajy, Iraq's Construction and Housing Minister, told the summit that Iraq plans to build a total of 2.5 million homes by 2016. Summit experts also said they see the near and long-term trend for the Middle East projects market being largely positive. "Oil prices will remain high, while other project market drivers such as rising population and economic growth will remain. The Arab Spring unrest could even be an impetus for capital investment, although larger political, security and bureaucratic issues need to be addressed," said Edmund O'Sullivan, chairman, MEED Events, organisers of the summit.