Despite the worst global recession to date, the GCC has more than US$1.3 trillion worth of announced and un-awarded projects and a further US$1.4 trillion worth of schemes in the wider Middle East, according to latest data from MEED Projects, the online project tracking database.
The analysis also indicates an uncertain outlook for the UAE construction sector with more than US$425 billion worth of construction and infrastructure projects put on hold or cancelled since the start of the market downturn in the fourth quarter of 2008. Of these, just under US$300 billion are located in the emirate, compared with its neighbour Abu Dhabi that has seen close to US$49 billion worth of projects postponed or cancelled. However, Dubai still has over US$216 billion worth of infrastructure projects under construction and nearly US$270 billion worth of projects in the pipeline or under bid.
In its forecasts for the future, the report nevertheless paints a bright picture for the region as a whole.
The most effective way to tap into these opportunities will be the primary focus of delegates attending MEED’s Arabian World Construction Summit (AWCS) that will be held from 24 May at the Abu Dhabi National Exhibition Centre. The event is part of the Arabian Construction Week that will take place from 24-26 May, incorporating four dedicated vertical trade exhibitions – Future Build, Civil Engineering, Building Machinery, and the Green Building Expos.
Of particular interest at the event is Saudi Arabia, which has overtaken the UAE to become the largest project market in the region with more than US$435 billion worth of projects planned over the next five years.
Edward James, Head of MEED Insight, MEED’s research and analysis arm, said: “It has been close to two years since the UAE real estate industry sector began to crash, but it is only now that a full picture has emerged of its impact on the construction industry. It is clear that there has been a considerable slowdown in contracting activity in the UAE over the past 18 months. Unsurprisingly, the contractors that had previously focused on Dubai as the main source of future business are now trying to diversify away from the UAE to look at new geographies for future project opportunities.
“Saudi Arabia represents the most obvious opportunity for contractors to focus on thanks to its emphasis on infrastructure, education and utilities fuelled by high oil revenues and strong demographic growth. However, companies looking to enter the market need to be aware that it remains dominated by local contractors, and that there are unlikely to be any quick wins. It may be that partnering and joint ventures are the most likely route to success.”
High-ranking government and public sector officials, regional CEOs as well as top executives from the private sector who will take centre-stage at MEED’s Arabian World Construction Summit in Abu Dhabi include Her Highness Fatima Obaid Al Jaber, COO of Al Jaber Group; Tahir Sharif, President of buildingSMART ME; Varun Khosla, Managing Director and CEO, Dynamic Staffing Services; Scott Hutton, Senior Lawyer, Habib Al Mulla & Company; Richard Carey-Brown, Vice-President, Parsons MENA; Mustafa Sani Şener, President and CEO of TAV Group; Michael Morgan, Regional Manager – Middle East, Zurich Global Energy; Eng. Mutaz Sawwaf, CEO of CPC; Andrew Killander, Vice-President – Global Sales, Aconex; and James F. Thompson, Chief Executive, AECOM International Government Services and President of AECOM Libya.
The event will also witness keynote speeches from David Barwell, Regional Chief Executive of AECOM; Riad Kamal, Chairman of Arabtec; Christophe Mariot, Regional Head of Structured Finance-BNP Paribas; Samer Khoury, EVP – Operations of CCC; Omur Akay, SVP and Regional Managing Director of CH2M Hill; and John D Davis, CEO of Colliers Middle East.
According to data from MEED Projects, the region is confident of other promising growth factors particularly with oil and gas performing strongly. In 2009, more than US$55 billion worth of hydrocarbons projects were awarded, double the amount of work signed in the previous two years combined. This year is expected to be just as high, if not higher than last, with more than US$11 billion worth of contracts already awarded.
James added: “The utilities and infrastructure sector are more of a function of demographic growth than the real estate sector, which had become primarily speculative as the bubble built up. Along with oil and gas capital investment, the two sectors will continue to grow because governments have little choice but to improve transportation links and power and water provision as the population of the region rises.
“At the same time, the long-term growth in energy demand will mean that national oil companies will need to continue investing in upstream and downstream projects. For contractors looking for new income streams, it would be worth building up expertise outside the construction sector to ensure they can compete for these different types of project.”
Key speakers at the event will also focus on the opportunities outside the civil construction sector. Buoyed by rising population levels, the utilities sector has barely been affected by the global crisis and indeed grew last year; close to US$35 billion worth of power sector contracts were awarded in the GCC in 2009 compared with some US$29 billion awarded the previous year.
In addition to the Arabian World Construction Summit (AWCS), the Arabian Construction Week will also host the Green Building Middle East Summit and Expo.
Al Jaber Group, CPC, Unibeton/Al Fara’a Group, TEKLA, Aconex, Dynamic Staffing Services, TAV Construction, Volvo Construction Equipment and Zurich Global Energy are the key sponsors of AWCS 2010.
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