The region recorded a healthy pick-up in contract award activity in March, following a weak February. With $26.1bn of deals let, there was a 625 per cent increase in the value of contracts inked between the two months. February saw just $3.6bn of awards.

The award of the Yanbu airport in Saudi Arabia as a public-private partnership (PPP) is a sign that the kingdom is starting to move forward with projects again and indicates that governments are looking to work more with the private sector in an effort to ease pressure on state coffers.

All six of the GCC states were active in March, with the UAE recording the biggest value of deals let, at $5.2bn, followed by Kuwait with $3.2bn and Qatar with $2.7bn. Saudi Arabia was a close fourth, with $2.3bn of contracts inked, while Oman came fifth, with $1.2bn, and Bahrain trailed at $240m.

The largest contract awarded in the UAE was for the $950m restoration of the Ruwais refinery, which was recently damaged by fire. Abu Dhabi signed the second-largest contract – a $872m deal for the world’s biggest single-site solar scheme.

Kuwait’s largest award was the $1.3bn contract signed with the UK’s Petrofac to build Gathering Centre 32.

The overall value of contract awards was lifted by Iran, which at $9.7bn, was the most active market. This was led by the revival of the $10bn North Pars gas field development as well as work on the South Pars scheme.

Looking back, the $26.1bn of deals let in March marks a high point for the region in recent times, the most recent being the $28.1bn of contract awards in February 2015.

Data from regional projects tracker MEED Projects indicates the total value of contract awards increased by about 20 per cent in the first quarter of this year, compared with the final quarter of 2016. The second quarter of this year will be crucial, says MEED’s deputy editor Colin Foreman. If the total value of contract awards increases again, then it will start to look like the market found a bottom at the end of 2016. 

Adding to the more positive outlook for the region’s projects sector is improved sentiment among business leaders in February, despite continued cash flow concerns. MEED’s Construction Market Index rebounded strongly in February with a score of 54.49, after a poor start to the year in January when the index hit a record low of 45.7, which was down substantially on the 54.5 recorded in December last year.

A score above 50 indicates the overall market conditions for the construction sector are improving, whereas a score below 50 indicates market conditions are worsening. The index is generated by collecting data from construction companies on five key metrics: turnover; backlog/order book; headcount; cash flow; and the outlook for the next six months.