Gulf's con­struc­tion sec­tor grows

The Pak Banker - - Front Page -


More than 2,500 ex­hibitors from 70 coun­tries grouped un­der 27 na­tional pavil­ions spread across six con­struc­tion sec­tors are vy­ing for con­tracts and busi­nesses worth Dh9 tril­lion ($2.5 tril­lion) in the Gulf re­gion, in­clud­ing Iraq and Iran. And Iraqi gov­ern­ment is look­ing at build­ing three mil­lion homes that is set to bring more op­por­tu­ni­ties for the sec­tor.

Shaikh Mak­toum Bin Mo­ham­mad Bin Rashid Al Mak­toum, Deputy Ruler of Dubai, on Mon­day, in­au­gu­rated the 30th edition of The Big 5 show that has his­tor­i­cally rep­re­sented the re­gion's build­ing and con­struc­tion sec­tor.

Ex­clud­ing Iraq and Iran, the to­tal value of an­nounced con­struc­tion projects in the GCC both un­der de­vel­op­ment and planned have reached Dh7 tril­lion ($1.9 tril­lion) in re­cent months, ac­cord­ing to a lat­est re­port by Cit­i­group.

"Dubai's real es­tate con­tract­ing has seen some­thing of a mini-re­vival re­cently with de­vel­op­ers re­port­ing ro­bust de­mand in cer­tain seg­ments. We be­lieve this has been driven by 'refugee cap­i­tal' from buy­ers fac­ing geo-po­lit­i­cal risk and cur­rency de­pre­ci­a­tion in their do­mes­tic mar­kets, e.g. In­dia, Iran, Pak­istan and Egypt," Heidy Rah­man, Ci­ty­group's Se­nior Eq­uity Re­search An­a­lyst, says. "While this lends some sup­port to the mar­ket we be­lieve de­vel­op­ment ac­tiv­ity is cen­tred on spe­cific build­ings rather than large-scale projects. Abu Dhabi has awarded some mega-projects but its pipe­line lacks growth."

In the year to end Septem­ber, project awarded reached $65 bil­lion in the re­gion. This is broadly in line with the same pe­riod in 2011. The UAE, with 33 per cent of these projects, rep­re­sents the big­gest mar­ket in the Mid­dle East North Africa (Mena) re­gion, fol­lowed by Saudi Ara­bia, which rep­re­sents a quar­ter of the re­gion's con­struc­tion pies, ac­cord­ing to the re­port. Cit­i­group pre­dicts $30 bil­lion (Dh110 bil­lion) worth of projects will be awarded be­tween Oc­to­ber and De­cem­ber this year. Year-to-date 230 projects have been awarded across the Mena re­gion, up from 214 awarded over the same pe­riod in 2011.

Iraqi spend­ing in Septem­ber has main­tained its monthly av­er­age of $380 mil­lion. How­ever, in the year to end Septem­ber spend­ing is down 14 per cent over the same pe­riod last year. "We be­lieve this re­flects the 30 per cent 1H fall in the oil price. Iraqi spend­ing very much de­pends on oil pro­duc­tion and as­so­ci­ated rev­enues," Rah­man says. By con­trast, awards across the UAE have picked up. In the year to end Septem­ber $21.4bn of projects have been awarded, trans­lat­ing to 33 per cent of the to­tal. This is 83 per cent higher over the same pe­riod in 2011. Over­all we do not ex­pect a ma­jor pick-up in UAE spend­ing given the 15 per cent de­cline in its pipe­line," Rah­man says.

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