GCC offers infrastructure opportunities

Qatar and the UAE rank in the top two spots of BMI Research’s Infrastructure Global Risk/Reward Index, while Saudi Arabia also makes the top ten.

“Strong construction industry real growth forecasts, which average 12.1% annually over the coming five years, and an infrastructure project pipeline stocked with numerous high-value projects related to the FIFA 2022 World Cup, see Qatar outperform the larger construction markets of the UAE and Saudi Arabia,” according to BMI Research.

Meanwhile, the UAE picks up second spot both regionally and globally, bolstered by a strong score for construction sector business environment, as well as political and economic stability.

Saudi Arabia comes in as the third most attractive infrastructure market in the MENA region – and tenth globally – with its scale as its most attractive trait, according to BMI Research. The country has a “significant infrastructure project pipeline and substantial demand stemming from the largest population in the region”.

Saudi Arabia has at least five cities with over a million residents, as well as hosting around two million pilgrims annually. This compares to Qatar, which has a population of 2.1 million.

The region is not without its risks, however. “Uncertain lines of successful, embedded terrorist threats and conflict [and] painful economic realignments in the face of lower-for-longer oil prices,” mean that the region has lowest regional average country risk score globally, said BMI Research, only ahead of Sub-Saharan Africa.

Reduction in public spending has been hitting Saudi cement producers particularly hard over the most recent quarter with most reporting significant falls in profits on the back of weaker cement demand.

“Decrease in net profit is mainly attributable to lower volumes due to slow cement demand because of [a] slow down of construction activities and the increase [in] energy prices,” said Najran Cement, which reported a 72.5% year-on-year fall in net profit in 4Q17 and 51.% fall over the full year.

Read the article online at: https://www.worldcement.com/africa-middle-east/03022017/gcc-offers-infrastructure-opportunities/