Future of Gulf construction looks brighter, says survey

Construction work on the King Abdullah Financial District, north of Riyadh, Saudi Arabia. (REUTERS)
Updated 30 January 2018

Future of Gulf construction looks brighter, says survey

LONDON: There are signs of improving optimism in the Gulf construction sector, despite continued worries about delayed payments and contract disputes, a new report said.
Overall sentiment in the building industry has risen by seven percent in the last two years, from 32 to 39 percent, a survey conducted by law firm Pinsent Masons’ found. The majority of the companies surveyed are involved in projects with a value of more than AED500 million ($136 million).
The UAE came out on top as the market expected to generate the most growth in the region, with 38 percent of respondents saying they expected the country to generate the most opportunity over the next 12 months.
“The UAE is set to see an increase in the number of projects during 2018 and we expect the country to remain in top position, particularly in the lead-up to Expo 2020,” said Sachin Kerur, head of Middle East region at Pinsent Masons.
Sentiment toward Saudi Arabia also improved, according to the survey, with 29 percent of respondents expecting the Kingdom to provide the biggest opportunities over the next 12 months. 
In 2016 just 11 percent of respondents said they saw the most opportunities in the Kingdom.
There were also pockets of pessimism, with 20 percent of those surveyed expecting their order books to decline by more than 10 percent in the coming months.
Around 86 percent of businesses said contract conditions have become less favorable during 2017, which is roughly in line with sentiment in 2016, while the same proportion said payment periods were longer in 2017 than the previous year.
Close to 70 percent of respondents said they were involved in more disputes during 2017 than had been expected.
“Whilst analysts predict a slight economic revival across many GCC markets during 2018, the survey results are indicative of what has been a challenging time for the construction sector — which has grappled with the impact of lower oil prices and ongoing geopolitical tensions,” said Sachin.
The report also highlighted the rising importance of Public-Private Partnerships (PPP) to attract inward investment into the industry. The survey found that 40 percent of respondents were currently involved or expected to be involved in PPP projects during the next 12 months. This compares to 32 percent in 2016.


Aramco international listing ‘still on the cards’: Saudi finance minister

Updated 39 min 2 sec ago

Aramco international listing ‘still on the cards’: Saudi finance minister

  • The minister said that he was “very confident” that the Saudi economy was picking up speed
  • He said that international investors had responded positively to ongoing reforms in the Kingdom

LONODN: Saudi Finance Minister Mohammed Al-Jadaan said that an international listing of Saudi Aramco was “still on the cards” but likely won’t happen soon.
He made the disclosure in an interview with Bloomberg News at the World Economic Forum’s annual meeting in Davos, Switzerland on Wednesday.
The minister also said that he was “very confident” that the Saudi economy was picking up speed, as the Kingdom successfully completed a $5 billion bond sale this week after receiving orders for four times as much.
“Yesterday showed very clearly that demand for Saudi credit is very high and very healthy. We are very pleased not only with the level of debt but also the pricing,” he said. “Demand is very positive. We are starting seeing results of Vision 2030. The numbers are proving that reform is working. We are basically cashing on the successes.
The minister said that international investors had responded positively to ongoing reforms in the Kingdom.
“I think investors are focusing on fundamentals,” he said. “They see the growth they see the potential. We are seeing a growth in FDI, a growth in the number of applications for licenses. The confidence is back in a strong way.”