After six challenging years for the GCC construction industry, contractors, consultants and suppliers can at last look forward to a return to growth and the prospect of rising project opportunities in 2022.
With some $1.4tn-worth of construction and transport projects planned in the GCC yet to see their main contracts awarded, the pipeline of future project opportunities is vast, with Saudi Arabia (63 per cent) and the UAE (21.5 per cent) accounting for nearly 85 per cent of the GCC’s planned future projects.
The outlook for the GCC construction industry has been transformed in 2022 by the sustained recovery in oil prices that started in the second half of 2020 and continued through 2021 and into 2022.
The increased revenues from oil exports have eased the pressure on national finances and are enabling governments to stimulate the recovery through investment in strategic infrastructure projects.
At the same time, increasing consumer confidence, the return of international travel and rising property prices are enabling
renewed private investment in commercial real estate projects.
For future growth, much depends on Saudi Arabia, which plans to deliver some $1tn of projects
Uncertainty of war
But while the prospects for oil prices remaining high in 2022 and 2023 are boosted by the reopening of the global economy after the easing of Covid-19 restrictions, the war in Ukraine is a reminder that the recovery is fragile.
War in Europe involving some of the world’s biggest economies has added to the inflationary pressure caused by post-Covid supply chain bottlenecks, which threaten to dent the global recovery. Construction companies must be aware that the uncertainty could delay key spending decisions on projects.
Confidence remains a challenge for the construction industry. Contractors are now more wary of signing new contracts after being financially hurt by the pandemic and some clients have not compensated them for delays.
When it comes to new awards, taking future risks on pandemics and viruses may be an issue for some contractors as clients do not usually accept taking such risks.
Another concern is supply chain bottlenecks and rising costs. Ships and ports are all facing setbacks. This trend will continue and will inevitably affect projects that are dependent on foreign materials.
For more information and sample pages from MEED Insight's GCC Construction Outlook 2022 premium intelligence report, please click here
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