Infrastructure spending is still considered a major growth driver in many GCC countries.
Research specialists says, spending on infrastructure development in gulf region, GCC countries Qatar, Saudi Arabia, and UAE together account for 80 per cent of the total value of investments in projects.
Converting surplus oil revenues into major infrastructure projects has a strategic objective on regional policies in the Middle East region. The spending on infrastructure has been used by the GCC governments to diversify from oil-based economies to sustainable long-term growth.
Infrastructure spending in the region had earlier helped the region to protect from the credit crisis and allowed the countries to sustain growth. These projects also integrate transport systems, electrical systems, pipelines, telecommunications, and also fiber optics.
DAMAC Properties, the largest independent developer in the Middle East, has predicted a spending of $452bn on GCC infrastructure projects. Once these projects take off, it will resonate in the regional property markets as well. According to Niall McLoughlin, senior vice president of DAMAC Properties, ?Government spending on infrastructure has a multiplier effect on the overall economy.? He also added ?Major projects require good resources and skilled labour. The more money spent, the more skilled labour is available for executing the project.
Rail projects accounts for nearly a quarter of the total spending. This includes the GCC railway project. The project links 2,117 km long network, starts from Kuwait and ends in Saudi Arabia. It is likely to be completed after five years.
Qatar is investing in providing facilities for the FIFA 2022 World Cup. Analysts say that Qatar will need to invest at least $90bn in housing and infrastructure for the event. The country has decided to allocate at least 37 per cent of its budget to major capital projects.