But while there are many reasons to be optimistic, several challenges remain. Many of the systemic flaws in the financial markets that triggered the downturn of 2008-09 continue, fuelling fears of a double-dip recession. Governments, consumers and companies in the region and around the world remain heavily indebted. Debt restructuring of corporates in Dubai, Saudi Arabia and Bahrain is ongoing and though confidence is returning, most bank chiefs admit it will be shaky for a while to come.

Despite a number of large contract awards, some high-value projects were put on hold or cancelled in 2010

The collapse of the real-estate market as a result of the financial crisis means government-funded infrastructure projects will continue to lead the way for the region’s construction sector in 2011.

This looks to be the case for the projects market as a whole. Despite a number of large contract awards, some high-value projects were put on hold or cancelled in 2010. The global recession, and the subsequent reduction of private investment in the region, has meant that the projects market is now driven by state-backed infrastructure schemes.

Saudi Arabia has emerged as one of the region’s biggest construction markets over the past couple of years, and is set to offer the most potential for contractors in 2011.

Yet it is not all good news. The kingdom – the region’s largest economy – was expected to build on the $57bn-worth of contracts awarded in 2009 and overtake the UAE as the biggest projects market in the region. So far in 2010, the total value of contracts awarded in the kingdom is $43bn, slightly higher than the UAE total, but still far lower than the previous year.

The GCC’s smaller projects markets hold greater promise for the year ahead. Oman, Qatar and Kuwait increased the value of awarded contracts in 2010. Kuwait, in particular, has almost doubled its capital project investment as it seeks to push ahead with its $100bn five-year plan.

The project market community should be encouraged by the number of awards that are expected to be made in the early part of 2011. Market confidence has returned in 2010, albeit at a measured pace. To this end, the year ahead is looking like it will be an active one for the region.