Saudi Arabia to remain the key construction market with contract awards data shows a potential pipeline of $374billion projects to be awarded over the period 3Q12-2013 in the UAE, Qatar, Egypt and Saudi Arabia, of which 53.7% (equivalent to 200billion) is to take place in the latter, according to BofA Merrill Lynch Global Research.
For the above four stated countries, the total pipeline of construction and infrastructure project awards stands at $157billion and $110billion, 41.9% and 29.5% of the total, respectively.
In particular, in Saudi, the pipeline of construction and infrastructure project awards stands at $90bllion and $39billoin, 45% and 19% of total. With the LNG expansion completed, Qatar’s pipeline is now skewed to construction and infrastructure (96.4% of total). Solid growth in construction awards in main GCC countries Total year-to-September broad MENA contracts awarded are moderately down year-on-year, though closing up the gap versus 2Q12, where they were down byc40% yoy. The data remains bulky but while Kuwait and Iraq construction in particular drag down the total, note that ytd contract awards in the UAE, Qatar and Saudi increased by 25% yoy to $41billion. Construction and infrastructure awards in the latter countries also increased by 16% yoy to $18billion year-to-date and on a year-to-date basis, while total awards (excluding defense contracts) are down 22% yoy in Saudi Arabia, this is mostly due to a large drop in oil and gas project awards (down 84% yoy to $0.8billion) – in the meantime, construction and infrastructure awards increased by 21% yoy to $6.3billion despite a soft patch over the summer months. In the UAE, the past four months saw large contracts being awarded in the oil and gas and petrochemical sectors worth $9billion while construction and infrastructure awards increased by $3billion over the same period. The latter grew by 32% yoy to stand at $7.9billion while total awards grew by a whopping 85% yoy to stand at $17.4billion year-to-September. After a strong start to the year in Qatar where construction awards were up 19% yoy in 5m12, these remained flattish over the summer lull. That being said, total awards still grew by 61% yoy year-to-September on the back of large recent contracts awarded ($6.4billion in the past month) in the petrochemical industry
Over the past year, Egypt understandably saw the largest number of projects cancelled and/or put on hold (seemingly evenly spread across the construction, infrastructure hydrocarbon, petrochemical sectors) while Qatar witnessed the largest increase in projects entering tender mode. The UAE appears to have turned a corner when it comes to severe project rationalization or cancellations after $450billion of these were put on hold between March 2010 and October 2011 (construction accounted for 89% of total project cancellations in the UAE to date.