UAE overtakes Canada in terms of infrastructure investment

The UAE has overtaken Canada to rank among the top three attractive markets in the world for investment in infrastructure. Singapore remains the most attractive in the world, followed by Qatar in the second place, according to the second Global Infrastructure Investment Index released by Arcadis on Monday. Saudi Arabia was ranked as 12th for the second year running. “The most dynamic infrastructure investment markets in the Middle East are located in the Gulf with Qatar, the UAE and Saudi Arabia all scoring in the top third of the index. These cash rich, economic powerhouses have some of the highest investment profiles of anywhere in the globe with average growth in construction services reaching double digits,” said Tim Risbridger, Partner and Head of Infrastructure, Middle East, at EC Harris, a global asset consultancy company. “Good infrastructure is critical for the long term economic development of a country, and the UAE is becoming more promising for investors in this regard,” said Risbridger. The Global Infrastructure Investment Index ranks the world’s 41 most dynamic countries with the greatest potential for growth and investment in their economic infrastructure. Economic infrastructure comprises the infrastructure that makes business activity possible such as transportation, communication, distribution and energy assets. The study noted that despite their cash-rich, hydrocarbon enriched positions these countries are all experienced in harnessing private investment, with the UAE and Qatar in particular having relied on access to cheap debt to finance investment. “Looking ahead, there are expectations that governments will seek to diversify funding streams further, accessing capital market finance to support spending plans,” it said. The power sector is particularly mature in this regard with the Middle East having a long history of Independent Water and Power Projects. Access to finance will be critical as the Middle East countries scale up investment. In Qatar and the UAE in particular, national vision strategies combined with major international events have led to expectations of phenomenal peak spend in the next 4-5 years, said the study. “Almost half of the investment planned relates to transportation, with every major city in the region planning to follow Dubai in building a metro system with lines being constructed simultaneously in a relatively short period of time. At the same time ports, airports and a heavy rail network are all under construction leading to increased competition for resources. The key risk in these markets therefore is inflation in construction resources from manpower and specialist skills to construction commodities,” said the study. The USA and the UK have entered the top 10 for the first time, indicating improvements in their economies and for the USA in the growing need for investment in infrastructure. While India slipped two places to rank as 25th, other Asian markets such as the Philippines, Indonesia and Thailand are among the most improved countries for infrastructure investment. However, their higher business risks keep them in the second half of the index, the study said. The study looked at various issues including the ease of doing business, GDP per capita, tax rates, government policy, the quality of existing infrastructure and the availability of debt finance.