Saudi Arabia witnessed solid increase in new construction projects in 2018 with a 17 percent year-on-year (YoY) surge in project awards, said a recent report by Arqaam Capital.
“Award momentum in KSA is regaining pace, with project awards up 17 percent YoY at $43 billion as of December 2018, following two years of negative growth (-35 percent YoY),” the report said.
In terms of clearing the backlog too, the momentum is gaining traction in the Kingdom, the report added.
“Backlog growth is modestly regaining pace across GCC+ Egypt in 2018, with tendered projects expanding on average 7 percent YoY, vs. a 10 percent YoY decrease in 2017. Growth was more pronounced in KSA than elsewhere in the GCC and MENA at 30 percent YoY, largely driven by NEOM,” the report by Arqaam Capital noted.
However, on the pan-GCC level, the overall awards fell YoY. “An inflection point has yet to materialize for the rest of the GCC, with year-to-date or YTD awards falling on average 33 percent YoY,” it added.
The report said KSA remains the largest project market (34 percent of GCC + Egypt), surpassing $600 billion in active projects (tendered + execution), forging ahead with its economic outlook.
Kuwait’s active project book totals $215 billion, all while historically showing the lowest suspension rate across MENA at 3 percent of backlog value, as execution bottlenecks are few, the report by Arqaam Capital added.
Qatar’s projects have been modestly scaled back (-10 percent YoY) on more rationalized CapEx spend towards World Cup 2022, while UAE has remained largely flat at $240 billion, it added.
“We see little in the way of Bahrain and Oman’s project backlog of materializing at scale in the near-term, given very real tightening fiscal policies,” the report concluded.
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