Construction: Middle East rides the new projects boom

21 November 2013

Transport awards, particularly metro schemes, are driving a construction rebound across the region

There can be little doubt now that the GCC is entering another construction boom.

By the end of the year, about $70bn-worth of construction contracts are expected to have been signed, a level not seen since 2008. A further $240bn of schemes is out to tender or in the design phase.

The difference from the 2005-08 boom is that the centre of activity is not the UAE’s property market. Rather, the work is more widely spread across the region. Saudi Arabia and Qatar both awarded more deals in terms of value than the UAE in the first half of 2013.

It is also government-funded infrastructure schemes rather than real estate developments that have dominated contract awards of late, in particular metro projects. This should ensure a more steady period of growth.

However, the inevitable consequences of a new boom are increased competition for labour and cost inflation.

Already, the UAE has seen construction costs rise by about 7 per cent this year and should Dubai succeed in its bid to host the World Expo 2020, prices for raw materials and labour are expected to soar. And with so many rail projects proceeding at the same time, concern is already growing over the availability of specialists.

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