Which sector’s ‘in top position in 2018’, with Dubai ‘a bright spot’?
The construction sector in the GCC region shows a marked increase in overall sentiment, growing from 32 per cent to 39 per cent in the annual GCC Construction Survey, released by Pinsent Masons, an international law firm specialising in energy, infrastructure, financial services, real estate and advanced manufacturing and technology.
Moreoever, nearly 40 per cent of respondents favour the UAE is the number one market expected to deliver growth this year. Other findings of the report, however, indicate that, while the sector is facing a rebound of sorts, participants still identify certain challenges.
For example, more than 80 per cent of businesses said they had become less favourable in 2017, while 20 per cent said they expect their order books to decline by more than ten per cent in the coming months.
However, there was consensus that two markets in the region were going strong and likely to remain so: the UAE and Saudi Arabia.
UAE continues to lead
“The UAE is set to see an increase in the number of projects during 2018,” noted Sachin Kerur, Head of Middle East Region at Pinsent Masons. “We expect the country to remain in top position, particularly in the lead-up to Expo 2020.”
Even within the UAE, Dubai continues to be the shining star. Consulting firm Deloitte’s GCC Powers of Construction 2017 notes: “When looking at the market sentiment amongst contractors, there is consensus that Dubai is still the bright spot compared to the rest of the GCC markets, where there are significantly fewer construction opportunities.”
Big budgets for Expo 2020
The report particularly notes that the Dubai market remains strong thanks to efforts leading up to Expo 2020: “Dubai, a market underpinned by building a tourism Industry and delivering Expo 2020, with growing population demands, still has a solid level of project activity.”
“The announced 2018 budget is the largest ever; 21 per cent of it has been allocated to infrastructure investments as the emirate prepares for construction projects related to Expo 2020,” it notes.
According to the report, $108 billion worth of contracts were awarded in 2017 across the GCC. Of this, the UAE was in the lead with $43.5bn, followed by Saudi Arabia with $24bn.
“The regional projects pipeline appears solid, with more than $2 trillion of projects currently in the planning stage,” the report reads, adding: “Construction, the largest sector with more than $1trn of projects in the pipeline, is followed by transport with $447bn and power with $224bn, according to MEED Projects.”
Dubai: More connected than ever in 2018
“This year will see Dubai more connected than ever to the global economy,” notes Deloitte in its Middle East Real Estate Predictions: Dubai 2018. “Dubai has established its position as a global city through various initiatives, including the development of world‑class infrastructure and a business‑friendly legal and regulatory environment.”
The firm makes note of the fact that the emirate is home to the largest airport in the world in terms of international passenger numbers – Dubai International Airport. Meanwhile, it also forecasts that the emirate has “developed globally competitive sectors, including finance, logistics, maritime and tourism.”
The emirate is also in the lead when it comes to the adoption of technology. “Dubai is leading the world in a number of technologies that are likely to disrupt the real estate market, including 3D printing and peer-to-peer technologies,” reveals the Deloitte forecast.
However, it also sounds a minor note of warning: “Although this presents a number of opportunities for Dubai, there are also risks that will need to be managed in 2018. According to the World Bank, risks to the global economy include increasing economic protectionism, heightened geopolitical uncertainty and the possibility of financial market turbulence.”