An approximate $14 billion (Dh51.42bn) worth of contracts were awarded in the Gulf Co-operation Council (GCC) states from April till date this year for the construction of buildings, energy and infrastructure projects, according to a senior official at Ventures Middle East, a project tracker firm.
The official said the GCC would see a decent growth of 10 to 15 per cent in terms of contracts being awarded during the year, with cautious optimism returning to the market.
"Of this figure, around $8.7 billion worth of contracts alone were awarded in the UAE," Mibu John, Syndicated Research Director at the firm, told Emirates Business. "This was a 32 per cent rise against the $10.6bn awarded in 2009 during the same period in the GCC and $5.6bn in the UAE, across the three sectors."
The UAE took the major chunk of contracts awarded in the energy sector in the GCC accounting for $6bn of the total $7.6bn worth of contracts for the period of April and May to date during this year.
However, contracts awarded in the building sector dropped by more than half to $4.7bn for the same period in 2010 against the $10.3bn in 2009 for the GCC and $2.5bn in 2010 against the $5.4bn during 2009 in the UAE for the same April-May period.
Infrastructure contracts though went up by 539 per cent from $246 million in 2009 to $1.57bn in 2010 in the GCC but dropped marginally to $102m in 2010 from $112m in 2009 in the UAE.
"The energy sector has started picking up," said John. "There is a lot of tendering happening in Abu Dhabi but there is also an air of caution. We expected to see many more awards in the first quarter of 2010 than that which were announced. But there was a delay in the awards."
He sees 2010 as a year of cautious optimism. "While there is a rise in contract awards, one may not see huge growth in 2010 compared to the previous year," he noted. "But we can say that there is possibility of 10 to 15 per cent growth in the construction sector for the entire GCC, and the UAE will see the same growth curve."
Optimism is rising due to steady growth of proactive stands taken by the UAE and potential projects in the pipeline that are very close to awarding the main contract over the next three to four months.
"From the beginning of 2010, everyone is feeling an air of optimism, especially, due to the proactive stands taken by the Dubai Government with regard to Dubai World and Nakheel," said John. "Besides, there are projects such as the Presidential Palace and Saadiyat Island, that will announce the main contract awards this year apart from all the other smaller projects that are expected to come online in 2010. This will be beneficial to all parties - from the developer to the consultant to contractors and suppliers. If you read between the lines, I would say that there are positive signs."
Phillipe Dessoy, General Manager at Six Construct, added: "Of course, 2009 was not a good year for everyone, not just in the construction industry but also across all international businesses. There were many offers submitted in the second half of 2009 and we saw many orders coming in the beginning of 2010.
"We see many projects right now at the planning or tendering stage and we expect to sign a few more contracts by the end of the year and even in 2011. We are looking at around Dh1bn if we sign a project in Bahrain, something in Qatar and a few contracts in the UAE. So far, we have signed around Dh6bn [worth of contracts] but expect this to go up to Dh8bn to Dh9bn this year and that will be a record for the company. The oil price is still very high and the dollar is improving as well when compared to the euro and this is a positive sign for the UAE and GCC."
Six Construct is the international subsidiary of the Belgian construction group, Besix. The group is earning around half of its turnover in the UAE, Bahrain, Qatar and Oman. The major part of it is still in the UAE, which accounts for 65 per cent of its turnover with Qatar following at 25 per cent.
Dessoy is also seeing a rise in requests for proposals in the region and opines that having a spread of project types is the way forward for construction companies to survive. "We always kept a basket of one third in each sector - buildings, marine and infrastructure. We are currently looking at some Department of Transport projects as well as a project that we have tendered jointly with Al Jaber in Abu Dhabi."
By Sona Nambiar
© Emirates Business 24/7 2010
