A new report has pointed out that the Gulf Cooperation Council (GCC) contracting industry is set to maintain its strong growth momentum due to several large infrastructure projects in the pipeline.
The Kuwait Financial Centre (Markaz) GCC Contracting Industry report highlights that projects worth more than USD 900 billion are currently being developed in the region. Of these projects, real estate projects have a worth of USD 516 billion. These large-scale real estate projects are being developed to meet the growing demand for housing due to mass urbanization, a growing population, influx of expatriate labor, and the relaxation of foreign ownership rules.
As a result, developers are not only focusing on building luxurious and grand projects. Their focus has now shifted to develop affordable housing by catering to the requirements of middle and lower income groups. Buoyed by a young and vibrant population, improved accessibility within the region and the government’s efforts to diversify the economy, infrastructure is being rapidly developed across many verticals.
However, there is further room for development in the sector by fostering greater public-private partnership. Public enterprises are supported by government policies to boost spending on infrastructure projects. Government authorities across the region have allocated higher budgets for infrastructure development to promote higher living standards and to ease public discontent as witnessed during Arab Spring.
The GCC Contracting Industry future:
- The future of the GCC’s contracting industry remains bright and offers significant room for growth for local and international players.
- Increased competition and a challenging business environment are also expected to benefit the industry.
- As GCC countries still remain heavily reliant on income earned through oil exports, any further slowdown in European and Western economies may adversely impact growth potential and impede the construction industry.
Further, the contracting industry may also face constraints in the availability of skilled and unskilled labor and supply chain networks, which could lower operating margins across the industry. Improved investor protection and strict enforcement of legal contracts may help to promote the GCC contracting industry.