Commitment to infrastructure drives Middle East's construction bounce back

RICS Global Construction & Infrastructure Monitor, Q1 2021

  
  • Recovery continues in Q1 with data signalling expansion in all regions
  • Infrastructure key driver of improving tone followed by private residential development
  • Rising material costs likely to hamper profit margins over coming year

Infrastructure workloads across the Middle East and Africa have increased for the first time since the pandemic hit, according to the latest RICS Global Construction and Infrastructure Monitor.

As countries across the region start to come out of lockdowns, the latest survey shows that infrastructure will lead the region’s construction recovery, as a net balance of +15% reported an increase in current workloads, and +45% more respondents expect infrastructure workloads to rise over the coming twelve months.

Following over a year with many working from home, it’s unsurprising that respondents to the survey point to a greater increase in ICT infrastructure, +34% in Q1 2021 and up from +14% in Q4 2020. Societies ambition to build back better is also reflected by an increase in workloads in agri-business and water.

Elsewhere, workloads across private residential and private non-residential are still falling, but to a lesser degree than in previous quarters with -12% and -23% of respondents, respectively, reporting a fall in activity (Q4 2020 net balances: -34% and -41%)

Looking at activity in each country, Saudi Arabia (STAT) saw solid growth in construction activity over the previous quarter, but Oman (STAT) and the UAE (STAT) saw a fall in overall construction workloads.

Despite numerous factors holding back activity at present, financial constraints continues to be the biggest impediment to growth, with 89% of respondents reporting this as an issue. Alongside this, over two-thirds of respondents feel material costs and a lack of demand are also impacting activity.

With the subdued current activity, employment levels fell, albeit to a lesser degree, for the fourth consecutive quarter. However, despite the subdued opportunities at present, respondents are more optimistic for the year ahead as 12% more anticipate an increase in headcount. Also looking ahead, respondents expect workloads across all sectors to increase over the next twelve months, however, profit margins remain flat.

Sean Ellison, RICS Senior Economist, commented on the global survey:

“Feedback from Chartered Surveyors indicate that the recovery in global construction markets is gaining momentum, propelled by work on infrastructure projects in Asia Pacific and residential projects in Europe (and to a lesser degree the Americas). With few exceptions, RICS professionals in most global markets expect a pickup in construction market activity across all segments of the market over the next year.

“However, the recovery is not without its challenges. Increasingly respondents are pointing out difficulty in sourcing materials amid supply chain bottlenecks, which appear to have resulted in the cost of materials pushing up overall construction costs. In markets that rely on migrant labour, the persistent restrictions on mobility have led to a shortage of labour. As a result, construction costs are expected to rise twice as much as tender prices over the next twelve months, which will undoubtedly put margin pressure on construction firms.”

-Ends- 

Comments from contributors:

Bahrain

Shortage of material supplies -Manama
Over supply of residential property has reduced demand from that sector - Manama

Kuwait

Government Strict measures implemented due to COVID-19 - Ahmadi

Oman

Paucity of funds both for project sponsors and contractors - Muscat
A major factor affecting all involved in construction including consultants is delay in payments - Muscat

Qatar

Shortage of resources at all levels.- Doha
Confidence should be boosted now the embargo has been lifted, but there are no noticeable signs yet - Doha
Inadequate levels of skilled labour because of movement restrictions - Doha

Saudi Arabia

The shortage of professional and skilled workers is the main factor affecting the construction - Riyadh
Travel restrictions are affecting construction works - Riyadh
The cost of materials, working permits, skilled professionals, and increasing of taxes in all region - Riyadh

UAE

Due to restrictions on free movement from Dubai to Abu Dhabi, local firms are increasing their rates - Abu Dhabi
Bigger developers have taken a break from new developments. They need to come back with new projects - Dubai
More contractors competing for a smaller amount of work - Dubai

RICS Global Infrastructure Conference 2021

With technologies emerging at a faster pace than ever before, expectations to build smarter become greater and more opportunities to leverage investments are created as our profession moves into a new era for infrastructure. Join us between the 17th-20th May for this global digital conference

About RICS

We are RICS. Everything we do is designed to effect positive change in the built and natural environments. Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

For more information:
Alexandra Booth: abooth@rics.org
John Bayliss: jbayliss@rics.org
Rebecca Hunt: rhunt@rics.org 

Send us your press releases to pressrelease.zawya@refinitiv.com

© Press Release 2021

Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.

The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.

To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.


More From Press Releases