The construction industry in the Gulf Cooperation Council (GCC) countries is expected to touch a record high of $126 billion, growing at a compound annual growth rate (CAGR) of 11 percent in 2016, according to a recent forecast by Alpen Capital.
The report cited major events such as World Expo 2020, which will be hosted by the United Arab Emirates and the FIFA World Cup 2022 in Qatar, as key drivers behind demand for architectural and engineering projects.
“The GCC construction industry foresees growth from 2015-2018, encouraged by factors such as favorable macroeconomics, higher government allocation, positive demographics, and rising tourism activities,” the report added.
Looking back, Saudi Arabia remained the largest market in terms of infrastructure projects awarded in 2014, followed by Qatar. Oman and Bahrain recorded maximum year-on-year (YOY) growth in terms of the value of projects awarded in 2014, followed by the UAE.
According to Alpen Capital, governments are also allotting higher budgets to the construction sector as the region moves to reduce its dependency on the hydrocarbons sector.
But, the sustained drop in oil prices could restrict or delay spending on construction projects, the report added, citing challenges facing the industry.
“Simultaneous rapid expansion of the GCC construction markets could result in a shortage of raw materials, particularly cement,” Alpen Capital said. “In addition, tough regulations on imports coupled with logistical challenges have led to the increase of raw material prices in the GCC.”
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