Optimism among the GCCs construction sector has been tempered over the past year, according to UK law firm Pinsent Masons Annual GCC Construction Survey.
The survey found that although industry remains broadly positive about its prospects for 2015, with 77 per cent of respondents stating they were optimistic, the confidence has fallen by 13 per cent when compared with last year.
The drop in positivity may partly be explained by overarching macroeconomic factors and changes in the dynamics of the construction market. The fall in oil prices has dampened confidence and is expected to, at the very least, slow down the decision making process on large scale government projects. On a more industry level, a highly competitive market combined with a softening in the rate at which order books are growing, and concerns about the cost of accessible capital have caused optimism to wane.
This years survey indicated that 33 per cent of respondents were expecting an upswing in their order books of 10 per cent or more, which compares with more than 40 per cent last year expecting that level of growth.
In Dubai, the industry now has a more measured view about the positive impact Expo 2020 will have on the sector. Less than 10 per cent of respondents thought that the UAEs Expo project between 2014 and 2016 would provide a dramatic upswing for construction companies. These results offer an insight into how the GCC construction market is shaping up for the year ahead. Optimism clearly remains high, but there is a marked cooling compared with last year when Expo fever was at its height, says Sachin Kerur, managing partner, Gulf region, Pinsent Masons
The cooling of optimism in the UAE means that Saudi Arabia is expected to be the best-performing market with 40 per cent of respondents saying it will be the strongest market in 2015. Construction firms have long perceived the opportunity in Saudi Arabia as being the most promising in the region, says Kerur. But, in the past, the challenge of doing business there has meant opportunities havent always come to fruition. This situation now seems to be changing, with the ease of doing business starting to improve.