Construction in the Middle East—key projects and outlook

Construction in the Middle East—key projects and outlook

Mark Raymont, partner at Pinsent Masons LLP Dubai, and Paul Prescott, legal director at Pinsent Masons LLP Qatar, take a look at construction activity in the Middle East, including the key infrastructure projects being procured or constructed, and consider the outlook for the industry.

How is construction activity in the region?

The major economies of the Middle East have been significantly affected by the drop in oil and gas prices since 2014, due to the region’s reliance on oil and gas as its major exports and the key role of state entities in procuring major projects. The resulting economic uncertainty has, in some cases, caused governmental departments to cut existing budgets and to reduce planned spending for infrastructure development and related activities, which has in turn affected the level of construction activity over the last few years.

With these fiscal challenges in the region, alternative funding and financing structures are moving more sharply into focus, especially delivery of infrastructure using public-private partnership (PPP) and concession models which previously may have not been considered when the oil prices were significantly higher.

Moreover, the reduction in the number of projects being tendered has increased competition throughout the region. Many contractors and consultants are now looking to offer innovative commercial solutions in order to secure work (including the provision of funding), and cheaper ways to deliver solutions in order to remain competitive.

While construction activity levels have by and large reduced across the region, nevertheless, certain jurisdictions remain reasonably active. In Qatar, for example, the country is preparing for the 2022 World Cup and is in the process of building new roads, railway networks, football stadia and other infrastructure and facilities to support the World Cup Tournament and its 2030 vision.

The same is true for Dubai—with Expo 2020 coming up, the construction sector remains active with a particular focus on transportation and general infrastructure.

In Saudi Arabia, the recent 2016 Middle East Economic Digest reported that projects worth $442bn in 2017 have been earmarked for the construction sector, followed by $228bn and $170bn for the transport and power sectors respectively. It is particularly noteworthy that the power sector is expected to launch a renewable energy programme between 2017 and 2023 to produce 10 gigawatts of power requiring an investment of between $30bn to $50bn. It has also been reported that Saudi Arabia has commenced feasibility st

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login

About the author: