|18 March, 2019

Saudi Arabia sees rebound in construction activity

The increase in infrastructure workloads was broad-based in the last quarter, with water and utility projects, road, rail and energy projects all experiencing robust growth

Saudi Arabia is witnessing a rebound in construction activity mainly due to headline infrastructure workloads increasing with contributors also reporting an improvement in operating conditions during the fourth quarter of 2018, said a report.

The increase in infrastructure workloads was broad-based in the last quarter, with water and utility projects, road, rail and energy projects all experiencing robust growth, stated RICS, a global professional body, in its market analysis.

The RICS Middle East Construction and Infrastructure Survey is a quarterly guide to the trends in the construction and infrastructure markets.

Respondents are asked to compare conditions over the latest three months with the previous three months, as well as their views as to the outlook.

The latest RICS survey results indicate that operating conditions remain difficult; however, respondents report an increase in infrastructure workloads throughout most of the region.

Despite a slightly more optimistic outlook, the region remains vulnerable to external economic shocks, it stated.

Expectations for 2019 are somewhat mixed, with respondents seeing an increase in workloads over the next 12 months, though at a more subdued pace in the UAE, Oman and Qatar, stated RICS in its market analysis titled 'Middle East Construction and Infrastructure Survey Q4 2018.'

According to the report, the tender prices for both, building and civil engineering are expected to decline along with profit margins remaining under pressure in these countries.

Participants in the UAE reported an upturn in infrastructure workloads as well, although at a slower pace, with energy projects seeing a particular rise in activity.

The outlook for infrastructure workloads over the next 12 months remains nuanced across the region, yet harbour and port projects are generally among the sub-sectors expected to see the largest increase in workloads in 2019.

New business enquiries and new workloads increased marginally in Saudi Arabia, though, the last quarter in the kingdom and also Oman saw an increase in payment delays. Additionally, there was a rise in the use alternative dispute resolution (ADRs) mechanisms in the kingdom, it stated.

A major factor holding back activity across the region, as cited by 85 per cent of respondents in each jurisdiction, was financial constraints. Contributors to the survey similarly identified competition and a lack of demand as drags, said the RICS report.

More than 52 per cent of the respondents in Saudi Arabia and 42 per cent of those in Oman said they also faced skills shortages, with contributors citing it as another significant factor holding back activity, meanwhile, in UAE this is seen as a drag by a lesser share of respondents, said the report.

BIM managers remain the most in demand across the region for a second quarter, with contributors from Oman (59 per cent), Saudi Arabia (52 per cent), UAE (41 per cent) and Qatar (37 per cent) all reporting a shortage of them, it added.-TradeArabia News Service

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