As the Big Project ME team shakes off the post-New Year’s Eve fog and begins planning for the year ahead, it’s perhaps an opportune time to take stock of what lies ahead for the GCC construction industry in 2015.
Contractors look set to have a lot on their plate despite a drop in the total value of projects awards, with transport and power infrastructure projects set to be amongst the major growth sectors, in terms of opportunities available to the industry.
Saying this, the sense of optimism that we saw at the start of 2014 has dimmed quite significantly. According to Pinsent Masons’ Annual GCC Survey, the level of optimism within the industry has fallen by 13%, compared to 2013.
This drop in positivity is attributed to the ongoing political uncertainty in markets like Iraq, while the fall in oil prices and increased competition in the market has also impacted on contractor confidence. What has been most surprising however has been the fall in perceptions for events like Expo 2020 and the FIFA World Cup in Qatar.
Less than 10% of respondents to the Pinsent Masons survey said that they thought the Expo would provide a dramatic upswing for construction businesses, at least between 2014 and 2016.
It’s not all doom and gloom however, and what really caught my attention was that 40% of respondents thought that Saudi Arabia was now the easiest regional market to do business with. To put that into perspective, less than 10% thought the same in 2013.
While the UAE remains the overwhelming leader in terms of ease of business (96%), this huge shift in perception for the Kingdom is indicative of the changing mindset of Saudi authorities, says Sachin Kerur, managing partner – Gulf Region at Pinsent Masons.
So what does this mean for the construction industry? Could we finally see the Saudi market start to open up in 2015? The implications of that could be huge for the regional construction industry, given its already established dominance.
We’ll certainly be keeping an eye on this developing story over the coming months. Things have just gotten extremely interesting in the Kingdom.