Construction: Continuing GCC projects growth into 2014

16 January 2014

After such a successful 2013, beating that target will be a major challenge for the GCC projects market in the year ahead

The GCC will do well to beat the $88bn-worth of construction and infrastructure contracts it awarded during 2013.

The total is the largest on record and was boosted significantly by one major project: Riyadh Metro. That scheme, valued at about $22.5bn, accounted for one quarter of the GCC’s total projects contract awards and about one half of Saudi Arabia’s $44bn.

To have such a large value of awards on one project is a freak occurrence. Normally schemes of this magnitude are procured in phases over several years. That was the initial plan for Riyadh Metro until the highest authorities intervened. The commonly told version of the story is that King Abdullah bin Abdulaziz al-Saud personally insisted that the project be delivered in one fell swoop, and it is that decision that produced the bumper year for contractors in 2013.

Without another Riyadh Metro, the market will have to grow strongly if it is to make up the $22.5bn and match last year’s total. The signs are encouraging. Governments are continuing to develop new infrastructure projects, and with the private sector rediscovering its appetite for investment – notably in real estate – there should be a large volume of contract awards in 2014.

The problem is that if these awards are not made, then the overall GCC market will decline this year.

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