Gulf's construction sector grows
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.