Fu­ture of Gulf con­struc­tion looks brighter, sur­vey finds

Con­cerns linger about pay­ment de­lays and dis­putes, re­spon­dents warn

Arab News - - BUSINESS - RE­BECCA SPONG

LON­DON: There are signs of im­prov­ing op­ti­mism in the Gulf con­struc­tion sec­tor, de­spite con­tin­ued wor­ries about de­layed pay­ments and con­tract dis­putes, ac­cord­ing to a new re­port.

Over­all sen­ti­ment in the build­ing in­dus­try has risen by 7 per­cent­age points in the past two years, from 32 to 39 per­cent, a sur­vey con­ducted by law firm Pin­sent Ma­sons found. Most com­pa­nies sur­veyed are in­volved in projects with a value of more than AED500 mil­lion ($136 mil­lion).

The UAE came out on top as the mar­ket ex­pected to gen­er­ate the most growth in the re­gion, with 38 per­cent of re­spon­dents say­ing they ex­pected the coun­try to gen­er­ate the most op­por­tu­nity over the next 12 months.

“The UAE is set to see an in­crease in the num­ber of projects dur­ing 2018 and we ex­pect the coun­try to re­main in top po­si­tion, par­tic­u­larly in the lead-up to Expo 2020,” said Sachin Kerur, head of Mid­dle East re­gion at Pin­sent Ma­sons.

Sen­ti­ment to­ward Saudi Ara­bia also im­proved, ac­cord­ing to the sur­vey, with 29 per­cent of re­spon­dents ex­pect­ing the King­dom to pro­vide the big­gest op­por­tu­ni­ties over the next 12 months. In 2016, just 11 per­cent of re­spon­dents said they saw the most op­por­tu­ni­ties in the King­dom.

There were also pock­ets of pes­simism, with 20 per­cent of those sur­veyed ex­pect­ing their or­der books to de­cline by more than 10 per­cent in the com­ing months.

Around 86 per­cent of busi­nesses said con­tract con­di­tions have be­come less fa­vor­able dur­ing 2017, which is roughly in line with sen­ti­ment in 2016, while the same pro­por­tion said pay­ment pe­ri­ods were longer in 2017 than the pre­vi­ous year.

Close to 70 per­cent of re­spon­dents said they were in­volved in more dis­putes dur­ing 2017 than had been ex­pected.

“While an­a­lysts pre­dict a slight eco­nomic re­vival across many GCC mar­kets dur­ing 2018, the sur­vey re­sults are in­dica­tive of what has been a chal­leng­ing time for the con­struc­tion sec­tor — which has grap­pled with the im­pact of lower oil prices and on­go­ing geopo­lit­i­cal ten­sions,” said Kerur.

The re­port also high­lighted the ris­ing im­por­tance of pub­lic-pri­vate part­ner­ships (PPP) to at­tract in­ward in­vest­ment into the in­dus­try. The sur­vey found that 40 per­cent of re­spon­dents were in­volved or ex­pected to be in­volved in PPP projects dur­ing the next 12 months. This com­pares with 32 per­cent in 2016.

Con­struc­tion work on the King Ab­dul­lah Fi­nan­cial District, north of Riyadh, Saudi Ara­bia. (Reuters)

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