According to projects tracker MEED Projects, the total value of schemes planned or under way in the Gulf at the start of 2008 stood at about $1.8trillion, up 34.5 per cent since January 2007.

The GCC markets accounted for about 90 per cent of the activity, with the UAE accounting for $714.5bn worth of projects at the start of 2008.

The UAE also recorded the biggest expansion in 2007, with a 51 per cent increase in project activity.

Although continuing high oil prices are set to sustain the region’s project boom in 2008, the rate of growth has probably peaked.

“The high levels of activity will continue in the coming year but growth will level off,” says one analyst. “The focus for developments will be on government-backed schemes, such as gas, power, desalination and transport.”

Rising project costs and a lack of contracting capacity will also contribute to the levelling off of the sector. The region’s growing skills shortage is the biggest issue facing contractors in 2008. “Manpower will be the issue of the year,” says one UAE-based contractor (see Special Report, page 43).

The lack of capacity represents an opportunity for new entrants to the market.

“In 2007, we saw for the first time Chinese contractors appearing on the bid lists for major power projects,” says the analyst. “I expect to see the Chinese presence continue to grow in 2008.”

TABLE: Gulf projects

$bn

4-Jan 2008

Change on year (%)

Bahrain

27.9

-12.9

Kuwait

275.2

29.6

Oman

50.7

29.6

Qatar

156.1

18

Saudi Arabia

390.2

26.6

UAE

714.5

50.9

GCC total

1,614.60

34.8

Iran

140.4

36

Iraq

33.2

16.6

Total

1,788.10

34.5

Source: MEED Projects

TABLE: Projects by market

Construction

Water

Power

Petrochemicals

Oil and gas

Industry

Bahrain

78.1

1.0

7.6

0.2

2.5

10.7

Kuwait

73.3

1.5

3.3

1.7

19.5

0.8

Oman

39.5

3.1

6.2

25.4

17.9

7.8

Qatar

40.1

4.1

7.6

9.0

36.6

2.5

Saudi Arabia

43.6

3.0

9.1

19.7

20.4

4.2

UAE

82.6

0.8

4.4

1.0

7.8

3.3

Iran

5.5

0.5

8.7

12.4

66.8

6.1

Iraq

33.8

17.3

7.6

9.0

28.1

4.1

Source: MEED Projects