In numbers

53 per cent: Work won by local firms across all sectors in the GCC in 2011

$112.3bn: Total value of contracts awarded in the region in 2011

Source: MEED Projects

As the Arab uprisings dominated the region’s political headlines in 2011, local firms ruled the GCC projects market, picking up 53 per cent of the $112.3bn-worth of contracts awarded across all sectors, according to regional projects tracker MEED Projects.

Bahrain’s top 10 contractors, 2011
Company Awards ($m) Origin
Mechanical Contracting & Services 1,030 Local
Chase Manara 500 Local/Malaysia
Abdullah H Aldarazi & Sons Company  400 Local
Veolia Water 200 France
Samsung Engineering 200 South Korea
Six Construct 150 Belgium
Nass contracting 129 Local
Kingdom Projects 100 Local
Afcons Infrastructure 66 India
Arabtec 60 UAE
Source: MEED Projects 

Qatar and Oman were the only two states to award more contracts to international firms than local companies.

Local contractors performed best in Bahrain and Kuwait, achieving market shares of 77 per cent and 63 per cent respectively. In Saudi Arabia, the GCC’s largest projects market with 54 per cent of total contract awards, local firms won 54 per cent of the $60.7bn-worth of projects awarded. In the UAE, the GCC’s second largest market, local firms enjoyed similar dominance, winning 53 per cent of $18.9bn-worth of contracts awarded.

Gulf dominance in construction market

Saudi Arabia’s projects market continues to be dominated by local construction firms, Saudi Binladin and Saudi Oger, which combined won 17 per cent of contracts awarded in 2011.

Kuwait’s top 10 contractors, 2011
Company Awards ($m) Origin
Alghanim International General Trading & Contracting 1,300 Local
Combined Group Contracting 1,000 Local
GS Engineering & Construction  1,000 South Korea
Mohammed Abdulmohsin al-Kharafi & Sons 625 Local
Schlumberger 430 US
Alstom 400 France
Khalid Ali al-Kharafi & Brothers 334 Local
Metallurgical Construction 334 China
Mushrif Trading & Contracting 323 Local
Ahmadiah Contracting & Trading 320 Local
Source: MEED Projects

Saudi Oger won $6.8bn-worth of deals, 11 per cent of the contract awards made in the kingdom. Its successful bid for the estimated $5.3bn second phase of the Interior Ministry’s security compounds network accounted for the bulk of its orderbook in 2011.

Saudi Binladin won $3.5bn of construction deals, including the $1.2bn contract to build the planned 1 kilometre-high Kingdom Tower in Jeddah, which will be the world’s tallest building once completed. Binladin is the most active firm in the Saudi projects market, currently contracted for $26.8bn of work. This amounts to a quarter of the $106.4bn of construction and infrastructure projects currently under execution, and 12.8 per cent of the projects under way across all sectors.

Oman’s top 10 contractors, 2011
Company Awards ($m) Origin
Hyundai Engineering 480 South Korea
Galfar Engineering & Contracting 466 Local
Bahwan Engineering 465 Local
Danieli 400 Italy
Marubeni 400 Japan
Chubu Electric Power  400 Japan
Fata  300 Italy
Larsen & Toubro 240 India
Enerflex 228 Canada
Strabag 210 Austria
Source: MEED Projects

The emergence of local firms as the driving force in the GCC projects market last year reflects the changing dynamics of the construction sector away from ambitious real estate developments aimed at expatriates to state-backed housing and social infrastructure schemes for nationals. “Housing schemes with villas are easier to build than skyscrapers, so local firms are able to compete and win work,” says one contractor in Kuwait.

The improved capability of local firms is also thought to have helped their performance.

“It is a different picture to a few years ago. Local contractors have raised their game to international standards, in terms of quality, speed and delivery,” says a local contractor in the UAE. “They have proved themselves now, can attract the best talent and aren’t afraid to take on big projects.”

This dominance may be short-lived, however, as orderbooks are quickly filling up. In Saudi Arabia, Saudi Oger and Binladin have long dominated the kingdom’s relatively closed projects market. But last year, there was evidence that international firms were successfully penetrating the kingdom’s construction market and winning major projects.

Qatar’s top 10 contractors, 2011
Company Awards ($m) Origin
JGC Corporation 1,700 Japan
Saudi Binladin 1,150 Saudi Arabia
Consolidated Contractors Company (CCC) 965 Athens-based
Hyundai Heavy Industries  889 South Korea
China Harbour Engineering 880 China
QDVC (Qatari Diar/Vinci Construction) 535 Local/France
Qcon 510 Local 
Hyundai Engineering & Construction 434 South Korea
Qatar Building Company 419 Local
Al-Bader Construction & Steel Works 400 Local
Source: MEED Projects

Turkey’s Baytur Construction & Contracting won a $800m deal on the King Khalid University project and the UAE’s Drake & Scull International was awarded a $500m deal to build the commercial buildings for the King Abdullah Petroleum Studies Research Centre in Riyadh.

With the Saudi government undertaking a construction programme of unprecedented size, international firms are poised to win more work in the next few years. “Binladin and Oger have dominated the market for a long time, but they are fast reaching full capacity. With so much work coming up, there will be chances for international contractors,” says a Riyadh-based consultant.

Saudi Arabia’s top 10 contractors, 2011
Saudi Arabia Awards ($m) Origin
Saudi Oger 6,800 Local
Daelim Industrial Company Limited 4,000 South Korea
Samsung Engineering 4,000 South Korea
SK Engineering 4,000 South Korea
Saudi Binladin 3,500 Local
Samsung C&T 2,900 South Korea
Saipem 1,800 Italy
Mohammad Al-Mojil Group 1,800 Local
Five Solis  1,800 France
Arabian Bemco Contracting Company Limited 1,400 Local
Source: MEED Projects

There were also plenty of opportunities for international companies in Saudi Arabia’s oil and gas sector. South Korean contractors dominated the kingdom’s projects market in 2011, winning 25 per cent of the contracts awarded. South Korean firms were particularly successful at the high end of the market, winning four of the six largest contracts awarded.

South Korea on top

South Koreans were not only successful in Saudi Arabia, they also won more work than any other international contractors in the GCC, signing deals for 17.5 per cent of contracts awarded in 2011.

In the UAE, South Korea was joined by India as the second-largest international player, claiming 7 per cent of the work tendered.

The UAE’s top 10 contractors, 2011
Company Awards ($m) Origin
Al-Habtoor Leighton Group 1,200 Local/Australian
Larsen & Toubro 798 India
CCC 664 Greece
Samsung C&T 600 South Korea
Six Construct 600 Belgium
Al-Rajhi Construction 569 Saudi Arabia
China State Construction Engineering Corporation 480 China
Ghantoot Transport & General Contracting Establishment 480 Local
Al-Hamad Contracting Company 477 Local
Arabtec 463 Local
Source: MEED Projects

Indian firms also performed well in the smaller Omani projects sector, picking up 6 per cent of the $6bn-worth of work awarded. Italian contractors dominated the sultanate’s projects market, with an 18 per cent market share.

In Kuwait, China’s construction majors, Metallurgical Construction Company and Sinohydro Corporation, were able to form joint ventures with local firms to win $1.2bn of work on the project to expand Kuwait University.

Qatar emerged as the GCC’s third largest projects market in 2011, awarding $13.7bn of contracts. With a vast construction programme in the run-up to the 2022 Fifa World Cup, it is a market that international contractors will be closely watching in 2012.

The GCC projects market was characterised by the dominance of local firms in 2011. But the South Koreans have shown that international firms can enjoy success in the GCC and with construction schemes of unprecedented size planned in Saudi Arabia and Qatar, there will be room for others to join them.