The best performing construction economy over the next decade
The building and construction sector has long been considered the second largest non-oil sector in the Middle East. Signs of weakness persisted in the industry in the past years, but the sector has a robust project pipeline from 2019 and beyond.
The industry was severely hit by cutbacks in capital spending between 2015 and 2016, following the crash in oil prices. As a result, several construction projects were cancelled or postponed, in conjunction with delayed payments to contractors that led to large-scale layoffs. Some countries are still suffering from the economic downturn and delayed private market investments.
Economic reforms under Vision 20XX programs appear to be making considerable headway in planning and launching key projects that will give a much-needed boost to its construction sector.
The aim to attract foreign and private investment has led to the announcement of large-scale infrastructure projects across the health care, transportation, tourism and renewable energy sectors. These announcements have aroused wide interest and have already had a positive knock-on effect on the region’s construction industry.
Ambitious government targets, a fast-growing population and a shift to privatization are creating new growth potential in the expanding construction market. Current governmental objectives outline a major emphasis on public-private partnerships, joint ventures and the privatization of government entities. Such measures will be critical to ensuring the region achieves its goal of increasing the private sector contribution to the country’s gross domestic product (GDP).
Regional frontrunners are Saudi Arabia, Egypt, Iraq, Oman and the UAE. Libya and other North-African countries may soon require immense rebuilding efforts supported by international monetary funding.
The outlook for the building and construction market has definitely improved, and the trend is underpinned by the continued increase in population, ongoing investments in infrastructure and energy and upcoming mega events.