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The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
The MEED view of the GCC construction market 2010
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The MEED view of the GCC construction market 2010

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  • 1. The MEED view of the GCC construction market Ed James, Head of MEED Insight A presentation for Arabian World Construction Summit Abu Dhabi, 24 May 2010 Copyright 2010 Emap Business Communications Ltd All rights reserved. No part of this publication may be reproduced, stored in any retrieval system, or transmitted in any form, by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of the copyright owner. While every care has been taken in completing this report, no responsibility can be accepted for any errors or omissions that may occur.
  • 2. MEED Insight MEED Insight is the research and analysis arm of the MEED group, providing off-the-shelf reports and bespoke services to customers. It offers tailored research on a broad range of countries and sectors in the Middle East on issues such as market sizing and outlook, project overviews and competitor analysis. The unit draws on the resources of: MEED Projects, which is tracking more than $7 trillion worth of schemes in the region; MEED magazine/ MEED.com, which has been reporting on the Middle East and North Africa for more than 50 years; and MEED Events, which organises over 25 premium events a year in the Gulf. For more information, please contact: Nicky Dawson, Business Development Manager nicky.dawson@emap-me.com or +9714 3681975 Edward James, Head of MEED Insight, Dubai edward.james@meed-dubai.com +9714 3671231 Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 3. Contents  Introduction  The Past: the boom years 2004-2008  The Present: coming back to Earth  The Future: a promising outlook  Project opportunities  Conclusions Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 4. MEED Projects The majority of data from this presentation is taken from MEED Projects, MEED’s proprietary online database of all major projects in the Middle East. MEED Projects is updated daily and currently tracks more than 3,000 projects totaling more than $7 trillion across the region. For more information on this service, please visit www.meedprojects.com Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 5. The Boom Years 2004 - 2008
  • 6. The Boom Years 2004-2008 The five years up to the end of 2008 marked an unprecedented period of growth for the six GCC states 90000 Value of projects awarded in GCC 2000-2008 80000 70000 Cumulative total of $720bn spent on capital 2000 60000 projects 2000-2008 2001 2002 50000 2003 $ms 2004 40000 2005 30000 2006 2007 20000 2008 10000 0 Bahrain Kuwait Oman Qatar Saudi Arabia UAE Country Source: MEED Projects The UAE was the clear hotspot for project activity but Qatar and Saudi Arabia were also important. Spending spree took off in 2005 Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 7. Real estate was the clear winner in terms of sector spending 90000 80000 Refining 70000 Industrial 60000 Water and Waste 50000 LNG $ms 40000 Petrochemicals Oil / Gas 30000 Production Power 20000 Infrastructure 10000 Construction 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: MEED Projects Dubai’s 2002 decision to allow non-GCC nationals was catalyst for real estate boom and was copied by some other GCC states, although to a lesser extent Infrastructure spending also high as governments improved transport links and adjusted to higher population levels Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 8. Direct correlation between oil price and growth in GCC project activity 250000 100 90 Total 200000 192163 80 contract 182866 value ($ millions) 70 162900 $ a barrel of oil 150000 60 Oil Price $ms 123163 50 nominal 100000 40 30 52485 Oil price 50000 20 inflation 30441 adjusted 13719 10 8670 10085 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: MEED Insight Alongside real estate speculation, the high oil price was the principal driver of project market growth Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 9. Other shared drivers of demand • Real estate and high oil revenues were the primary contributing factors to the project boom. But there are others too:  Undeveloped infrastructure – especially in transportation sector, and roads  A new generation of leadership committed to diversification and modernisation of the economy  The relative failure of previous oil booms and the oil crash of 1998  Fast-growing population and the need for greater utility and housing capacity • Apart from real estate, the other project drivers still remain Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 10. The Bursting of the Bubble?
  • 11. The bursting of the real estate bubble Value of all GCC projects put on hold or cancelled 80000 70000 67946 60000 Value of all projects put on hold in 2008-2009 = $168bn 50000 Value $ms 2006 40000 2007 Value of all projects put on 2008 30000 hold 2008-2012 = $514bn 20437 2009 20000 10000 6199 4055 4255 3699 0 Bahrain Kuwait Oman Qatar Saudi Arabia UAE Country Source: MEED Projects At its peak in March 2009, the GCC project market was worth $2.6 trillion. Today, we value it at $1.9 trillion. However….apart from the UAE, the rest of the GCC has not been so affected Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 12. A massive number of Dubai projects put on hold Value of construction and infrastructure projects in the UAE by status 450,000 425,000 Considerable uncertainty 400,000 whether these will proceed 350,000 300,000 270,000 250,000 216,000 $ms 200,000 150,000 100,000 50,000 0 Projects on hold or cancelled Projects under construction Projects planned or under bidding Source: MEED Projects On hold projects now nearly double those under construction. ome 40 per cent of UAE projects on hold or cancelled Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 13. Abu Dhabi has been far less impacted than Dubai Comparison of on hold projects by emirate 350,000 295,000 300,000 250,000 200,000 $ms 150,000 100,000 49,000 50,000 0 Dubai Abu Dhabi Source: MEED Projects Abu Dhabi clearly less troubled by economic crisis. Capital is expected to overtake Dubai in terms of construction activity over coming five years. However, concerns remain over real estate Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 14. Material prices have dropped dramatically 160 Impact of economic crisis on material costs 140 120 100 Oct-08 $ 80 Oct-09 60 Feb-10 40 20 0 KSA Cement KSA Rebar KSA Ready mix UAE Cement UAE Rebar UAE Ready mix (500kg) (100kg) (m3) (500kg) (100kg) (m3) Source: Davis Langdon research for MEED Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 15. The bubble only burst for some Value of projects on hold or cancelled in the region 500000 45 446984 % of projects in each country that are on hold 450000 40 400000 35 350000 30 300000 25 $ms 250000 20 200000 15 150000 10 100000 52987 50000 38852 5 24963 14780 14670 0 0 Bahrain Kuwait Oman Qatar Saudi Arabia UAE Source: MEED Projects Clearly an issue with the UAE projects market, but the rest of the region has escaped relatively unscathed. Kuwait and KSA least affected Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 16. There has been a sharp fall in construction activity, but overall spending has been less impacted Value of GCC construction Value of GCC contract awards contract awards 2007-2009 other sectors 2007-2009 40000 50000 45000 35000 40000 30000 35000 25000 30000 $ms 20000 25000 20000 15000 15000 10000 10000 5000 5000 0 0 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Source: MEED Projects Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 17. Indeed it is largely business as normal in other sectors 600000 Breakdown of GCC on hold projects by sector 500000 400000 $ms 300000 200000 100000 0 Source: MEED Projects Damage outside construction sector is comparatively small Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 18. Spending on strategic sectors remains relatively stable or has even increased Source: MEED Projects No indication of that spending on key sectors is going to reduce thanks to continued population growth, high oil prices and increased demand for utilities Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 19. Indeed KSA projects market bucked the global trend last year Source: MEED Projects While UAE projects market has collapsed, KSA actually doubled in size last year! Clear to see that other GCC markets remain small in comparison to UAE and KSA Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 20. However, for now the UAE remains the busiest project hub Value of projects under construction in the GCC by country 250000 220227 200000 150000 131673 $ms 100000 52087 50000 22906 23651 16274 0 Bahrain Kuwait Oman Qatar Saudi Arabia UAE Source: MEED Projects Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 21. But in terms of un-awarded projects Saudi Arabia is the new leader Budget value of active announced and un-awarded projects in the GCC 500000 450000 438158 401347 400000 350000 300000 251738 250000 200000 150000 130787 100000 66482 55415 50000 0 Bahrain Kuwait Oman Qatar Saudi Arabia UAE Source: MEED Projects UAE projects market will continue to contract while KSA market will continue to grow Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 22. Future Outlook
  • 23. Kuwait and Saudi Arabia have the largest capacity for growth in projects market 450000 Value of GCC projects by status 2005-2015 400000 350000  Contracts awarded 300000 2005-2010 $ millions 250000  Projects planned or 200000 announced 2010-2015 150000 100000 50000 0 Bahrain Kuwait Oman Qatar Saudi Arabia UAE Source: MEED Projects In contrast, Qatar and the UAE have probably already passed their project activity peak Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 24. Construction is still the main sector Value of planned and un-awarded projects in the GCC by sector 800000 714554 700000 600000 500000 400000 300000 228511 200000 91418 104495 100000 65645 53680 5364 24821 2680 0 Source: MEED Projects Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 25. Only in Qatar is construction not the largest sector Breakdown of planned and un-awarded projects by country and sector UAE Saudi Arabia Water and Waste Qatar Refining Power Petrochemicals Oil / Gas Production Oman Infrastructure Industrial Construction Kuwait Alternative Energies Bahrain 0 50000 100000 150000 200000 250000 Source: MEED Projects $ms Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 26. The greater Middle East also hold a lot of promise Budgeted value of current and future projects outside the GCC 400000 350000 340800 300000 290359 250000 201681 $ms 200000 155109 147137 141183 150000 99611 100000 78137 64134 50968 50000 17690 9021 0 Algeria Egypt Iran Iraq Jordan Lebanon Libya Morocco Sudan Syria Tunisia Yemen Source: MEED Projects The wider region clearly represents an opportunity Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 27. Other reasons to be hopeful • Government budgets are up on 2009 expenditure • Saudi Arabia $144bn (+14%) • Kuwait $56bn (+33%) • Qatar $32bn (+25%) • Oman $19bn (+12%) • The high oil price has allowed governments to set more ambitious budgets and ensure an expansion of their capital investment programmes. • All told, there will be more than $35bn worth of government spending in the GCC this year compared with 2009 Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 28. Saudi Arabia - outlook is very bright MEED forecast of KSA total contract awards 2010-2015 100000 90000 86,277 78,803 Forecast 80000 72,403 68,772 70000 64,454 64,013 58663 60000 Actual awards $ms 50000 43198 41867 40000 35108 36112 30000 20000 10000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year Source: MEED Insight The crucial element for the forecast is for the oil price to remain above $50 a barrel Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 29. Forecasted project pipeline is very healthy KSA forecasted total contract awards by sector 2010-2015 45,000 41,400 40,000 36,185 36,000 35,000 32,996 31,200 Road 30,000 Construction 24,600 Rail 25,000 $ms Water & Wastewater 20,000 Power 15,000 Ports 10,000 Petrochemicals Oil and Gas 5,000 Airports 0 2010 2011 2012 2013 2014 2015 Year Source: MEED Insight Our forecasting takes in to account delayed and cancelled projects and provides a more realistic picture of future project activity Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 30. Saudi project opportunities • Fast-growing population means government has to diversify economy. Six economic cities will require more than $100bn of investment to provide homes and jobs for local nationals • Ambitious rail and airport plans to improve transportation links • Three new world-scale refineries and world’s largest crude increment plan • More than 3,000 MW a year of new power capacity required for the next 10 years • Plans to build wastewater facilities in every major city • Project market driven by necessity as much as capacity Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 31. But ….a word of caution KSA construction and infrastructure contracts won by KSA civil construction sector is hard to break into foreign contractors 10373 17% KSA construction and infrastrucuture contracts under execution Source: MEED Projects 51735 83% Since Dubai real estate collapse, regional contractors have all been targeting KSA, but reality is that it is hard to compete against local firms. Contractors who want to win work in KSA will have to team up with a local partner or look for subcontracting work. Kuwait is a similar story Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 32. Kuwait – a sleeping giant • Despite its wealth, state has yet to get going. Signs are now that it is finally preparing to develop its potential with new 5-year, $100bn investment programme. • Major projects include: • Subiya Causeway - $3bn • Expansion of airport - $2bn • New Kuwait University Campus - $3bn • Development of Failaka island - $3bn • New Bubiyan Port - $3bn • New Al Zour refinery - $12bn • Non-local contractors can only bid on largest projects but still plenty of opportunities Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 33. Iraq – a less hostile environment • Iraq’s infrastructure is in ruins. The award of permits for 10 major field developments will soon see Baghdad producing more than 6 million b/d of oil and earn significant amounts of revenue. • Local contracting capacity is limited and international expertise is required • Contractors already entering the country to help the IOCs • A massive amount of work required ranging from railways and refineries to sewage treatment plants and new housing stock. • Iraq will become a hotbed of contracting activity over next five years Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 34. Conclusions • After an unprecedented boom between 2005-2008, the GCC projects market is now in a period of adjustment. • Clearly, real estate will not provide the same number of opportunities as before and Dubai is unlikely to see the same amount of activity • However…. the other drivers that have pushed the project market remain. High oil prices, strong population growth and a commitment to diversification and modernisation ensure that there will continue to be opportunities in the GCC and the wider region as a whole • Infrastructure, transportation, utilities and hydrocarbons in particular will see significant investments over the next 10 years • Contractors which can operate across sectors and which can tap into new markets will be the most successful Copyright MEED Insight What do you think of this presentation? Take our short survey here
  • 35. MEED Insight’s GCC construction market survey We hope that you found this presentation beneficial. In order to help MEED Insight serve the information needs of our customers in the best possible way, we would be grateful if you could take a couple of minutes to fill out a short survey reviewing the presentation. Please click here to take part: MEED Insight’s GCC Construction 2010 Survey THANK YOU Copyright MEED Insight

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