Construction activities in GCC seen improving in 2019
Construction activities in most GCC countries are likely to witness improvement over the next 12 months as infrastructure workloads continue to increase throughout most of the GCC region amid difficult operating conditions, according to a survey released by RICS.
According to the Q4 2018 RICS Middle East Construction and Infrastructure Market Survey report, expectations for 2019 are somewhat mixed, with respondents seeing an increase in infrastructure workloads over the next 12 months, though at a more subdued pace in UAE, Oman and Qatar.
The report said despite a slightly more optimistic outlook, the region remains vulnerable to external economic shocks. ‘Tender prices for both, building and civil engineering are expected to decline along with profit margins remaining under pressure in these countries.’
Saudi Arabia, however, is witnessing a rebound in construction activity due to headline infrastructure workloads increasing, with contributors also reporting an improvement in operating conditions during the fourth quarter of 2018. ‘The increase in infrastructure workloads was broad-based in the last quarter, with water and utility projects, road, rail and energy projects all experiencing robust growth’, RICS said.
Participants in the UAE reported an upturn in infrastructure workloads as well, although at a slower pace, with energy projects seeing a particular rise in activity. The outlook for infrastructure workloads over the next 12 months remains nuanced across the region, yet harbour and port projects are generally among the sub-sectors expected to see the largest increase in workloads in 2019.
New business enquiries and new workloads increased marginally in Saudi Arabia, though the fourth quarter of 2018 in Saudi Arabia and Oman also saw an increase in payment delays, the report added.
It said that a major factor holding back activity across the region, as cited by 85 per cent of respondents in each jurisdiction, was financial constraints. Contributors to the survey similarly identified competition and a lack of demand as drags.
Saudi Arabia (52 per cent respondents) and Oman (42 per cent respondents) also face skills shortages, with contributors citing it as another significant factor holding back activity, meanwhile, in UAE this is seen as a drag by a lesser share of respondents.
RICS is a global professional body promoting and enforcing international standards in valuation, management and development of land, real estate, construction and infrastructure.