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projects are not only favouring the local firms but also attracting interest of foreign
investors. Many foreign companies have been keen in collaborating with the Oman
Ministry of Transport and Communications (MoTC) for its planned projects in rail,
ports, pipelines and airports. Encouraged by the spending power of the population
and the shift in the shopping trend of customers from traditional souqs to shopping
malls, more and more foreign retailers are also entering Oman. Although a relatively
small market in the Middle East, Oman is attracting foreign investments on the back
of healthy growth prospects and positive business outlook.
With the continuing progress of the governments ambitious infrastructure
development plan, Oman will be able to promote itself as a regional business and
tourism hub. Enhanced infrastructure will further increase trade and commerce in
the Sultanate, translating into healthy and sustainable economic growth for the
nation.
Local Improvements
Many in the sector will remark that only a decade ago, the logistics sector in Oman was a
shadow of its present form. Indeed, calculations based on a 2004 McKinsey report suggested that
back then, logistics was still widely considered an in-house affair, with 90% of all logistics and
supply chain operations dealt with in this fashion as opposed to 20-30% in Europe. Seen as
simply a transportation cost, the sector often lacked a systematic and professional approach, with
the competitive value of logistics in bringing goods more efficiently to market overlooked.
The transport network in Oman continues to overcome various historical barriers to the smooth
flow of goods and people within its territory. Heavy trucks were previously limited by weight
restrictions on highways, while congestion around Muscat in particular was severe. Warehousing
was often located in areas near to port, with a lack of refrigeration facilities also impacting the
quality of goods delivered. A lack of regional airports also inhibited the delivery of perishable
goods over long distances. Yet now, some in the sector say, the industry is a different place. The
infrastructure has improved hugely in the last few years, Chris Clark, the country director of
Oman for ASCO Middle East, told OBG. Warehousing, highways, the whole attitude towards
logistics has made a lot of progress.
Organisation
ndicative of this are the Omani Logistics and Supply Chain Association and the Chartered
Institute of Logistics and Transport, both set up in 2011-12. The sultanate is also the venue for
Transoman, an annual industry gathering which actively promote best practices and Omans
target of becoming a regional hub.
Around Muscat, the logistics trade has followed developments in the urban infrastructure,
moving warehousing out of the old centres around Ruwi and towards the airport. Warehousing is
also now much higher quality, with racked storage, computerised inventory and good climate
control. Previous health and safety concerns are being more comprehensively addressed in these
new facilities, while companies are also now exploring government permission for bonded
warehouses away from the ports and airports.
Bottlenecks
The system of expressways has also solved the weight problems with the old roads, while the
governments continued expenditure on new road projects, including the Al Batinah Expressway
to Dubai, have also eased transport congestion (see overview).
The bottleneck, however, is transport to the newly developing ports, such as Duqm, where roads
are trying to catch up with accelerating port usage (see analysis). The Ministry of Transport and
Communications (MOTC) is currently funding a 372-km road construction project to expand the
existing link between Duqm to the town of Sinaw to overcome this.
Another major bottleneck in late 2012 was Customs posts for the slow crossing into the UAE,
logistics insiders told OBG. This will be important if the planned Gulf railway comes to fruition
(see analysis).
Muscat International Airport also faces logistical challenges as it continues to operate at
overcapacity, until the new terminal becomes operational (see analysis). Nonetheless, the
authorities have been expanding and improving the existing facilities, including recent new
computer software for the cargo side.
Many Omani firms are working in the business, in spite of more international companies
commencing operations locally. Although Warith Al Kharusi, the executive director and
chairman of the Oman Logistics and Supply Chain Association noted that the workforce needs
to be skilled in order for the industry to remain sustainable and to drive growth. Indeed,
difficulties continue to persist in recruiting well-qualified local staff.
Oman Land Transport Infrastructure Summit 2013 brings together the project owners,
contractors, consultants, equipment suppliers and technology providers to share knowledge and
network. The summit will support Oman to develop its infrastructure projects by implementing
state-of-the-art technologies and products, gaining on the success of the last two events, say the
organisers.
Expert advisors for the event, being held in Muscat from 8-11 September, 2013, include Howard
Rosen, chairman, Rail Working Group; Anthony Pearce, honorary life member and former
director general, International Road Federation and Grant Gellatly, project director Galfar
Engineering and Contracting.
Keynote regional and international speakers have also been lined up to take part in the summit.
Senior representatives from Omani authorities and transport operators, international and local
consultants, contractors, financiers, designers, civil engineers, material suppliers and
manufacturers will meet to discuss transportation projects, exchange best practices to overcome
challenges and share expertise on solutions available to develop cost-effective and sustainable
transport infrastructure in the Sultanate.
The summit will showcase during interactive sessions and a full day workshop, international
case studies on railway project design, supervision, management, construction and procurement
best practices that will assist the Omani authorities and potential private stakeholders in
enhancing their technical expertise on the strategies and solutions to be selected and
implemented to develop an efficient railway network across a challenging landscape.
The organisers say that it is hoped attendees will also learn about new techniques and
technologies to build higher quality infrastructure projects; gain an understanding on efficient
maintenance techniques to protect infrastructure and avoid maintenance investments in the
future; develop strategies to overcome challenges with new laws and policies and increase
profits; implement Intelligent Transport Systems (ITS) to integrate all modes of transportations
and boost economic growth, and develop an efficient safety policy to reduce the number of
accidents and fatalities.
How to develop a safe and efficient land transportation network within Oman and
the GCC, in order to boost economic development
Omans infrastructure is on the verge of a huge expansion, with numerous road projects, bridge
structures, tunnel constructions and national railway networks being developed over the next 5
years.
Oman Land Transport Infrastructure Summit 2013 brings together the project owners,
contractors, consultants, equipment suppliers and technology providers to share knowledge and
network. The summit will support Oman develop its infrastructure projects by implementing
state-of-the-art technologies and products, gaining on the success of the last two events. Make
sure you are in Muscat, Oman from 8 -11 September 2013!
Register here
Benefits of attending Oman Land Transport and Infrastructure Summit 2013:
1. Learn about new techniques and technologies to build higher quality
infrastructure projects
2. Gain an understanding on efficient maintenance techniques to protect
infrastructure and avoid maintenance investments in the future
3. Develop strategies to overcome challenges with new laws and policies and
increase profits mplement
4. Intelligent Transport Systems (ITS) to integrate all modes of transportations
and boost economic growth
5. Develop an efficient safety policy to reduce the number of accidents and
fatalities
VIP Speakers
US $10bn to be invested for developing the national rail project with a vision
to connect to other GCC countries
Special economic zones developed in DUQM and Sohar, which requires huge
infrastructure support in the from of roads, bridges, tunnels and highways
The second section of the 400km road between Sinaw and Duqm has been awarded to Austrian
construction company Strabag. The announcement bodes well for our already positive outlook
on Oman's infrastructure industry as well as for Strabag, which continues to pursue a strategy of
international diversification. Furthermore, the contract win demonstrates Strabag's commitment
to gaining greater exposure to fast-growing markets as well as the attractiveness of Oman's
business environment to major international construction players.
After Oman's Ministry of Transport and Communications (MoTC) authorised the contract to
widen and expand the Sinaw-Mahoot-Duqm in December 2012, the project has now been
awarded to Strabag. This US$120mn contract involves the construction of 100km of the 400km
road that connects Sinaway with the Duqm industrial centre. Apart from improving connectivity,
the new road is expected to improve security standards for drivers as it includes an emergency
lane in addition to the traffic lane.
This project, which is to be built in the eastern part of the country and will run through the
dessert, will have to overcome several technical challenges. As explained by Thomas Birtel,
Strabag's CEO, the road's geographical location makes logistics and the procurement of
construction materials particularly difficult. In addition, the project requires 4.2mn square meters
(sq m) of earthworks and an estimated 60,000 square meters of concrete for the drainage system.
Construction of the new road is scheduled to start in January 2014 in order to reach completion
by 2016.
Slower But Steady Growth
Oman Construction Industry Value (OMRbn) And Real Growth %
Road projects are the fastest-growing part of Oman's transport infrastructure sector, as the
country aims to maintain its top spot in international rankings. According to the World Economic
Forum Global Competitiveness Index, Oman ranks third after the UAE and France in terms of
quality of roads infrastructure. The recently-built road network in Oman has been engineered to
the highest standards, while significantly improving connectivity not only internally but with
neighbouring countries. Having said this, there is still significant scope for investment as less
than 50% of Oman's roadways are paved. However, the new road project will be asphalt-paved.
As for Strabag, the company has been pursuing opportunities in the Middle East construction
market, which holds significant growth potential. In Oman, the company is already involved in
the construction of a flood protection dam and two road projects with a combined value of
US$163mn. These development's bode well for Strabag's future earnings, as it shows the
company is succeeding in gaining greater exposure to its high-growth international target
markets. Strabag is pursuing contracts in selected countries in East Africa and Asia as well as
existing foreign markets, which include Oman, Saudi Arabia, the UAE and Qatar.
Sultanates infrastructure spending to drive sustainable growth
Saturday 19th, July 2014 / 22:15 Written by Oman Observer
in Business
8.2 per cent by 2024 on the back of the developing hospitality and leisure industry.
In line with the Vision 2020, aiming to reduce the dependence on oil and gas, the governments
investment plan also focuses on the manufacturing sector, power and water generation, retail and
social development. Rising population in the Sultanate has increased demand for healthcare and
hence the government and the private sector are investing heavily in projects like the
International Medical City, Salalah as well as a number of hospitals. A steady increase in
disposable income levels and improving purchasing power has also resulted in a surging demand
for retail and commercial facilities. According to Middle East Economic Digest (MEED)
projects, the total value of projects planned or under way in the Sultanate is about RO 58 billion
as at the end of April 2014, sector-wise breakup of which is as below:
Implementation of such massive projects has propelled the rapid expansion and growth of the
construction sector. Sultanates construction sector grew at a compound annual growth rate of 4.5
per cent during the period 20082012 and is said to have expanded at a higher rate of 6.3 per
cent last year. Going forward too, according to Business Monitor International, Omans
construction industry is estimated to grow at 6.4 per cent in the current year and peak at 6.7 per
cent in 2015, supported by a strong project pipeline, particularly in the transport sector and the
bur-geoning tourism industry.
The biggest beneficiaries of this construction push are the contracting companies as well as
manufacturing companies. Improved demand for related products like cement, steel, specialty
chemicals, ceramic tiles etc has encouraged domestic companies to ramp up their production
capabilities. These large infrastructure projects are not only favouring the local firms but also
attracting interest of foreign investors. Many foreign companies have been keen in collaborating
with the Oman Ministry of Transport and Communications (MoTC) for its planned projects in
rail, ports, pipelines and airports. Encouraged by the spending power of the population and the
shift in the shopping trend of customers from traditional souqs to shopping malls, more and more
foreign retailers are also entering Oman. Although a relatively small market in the Middle East,
Oman is attracting foreign investments on the back of healthy growth prospects and positive
business outlook.
With the continuing progress of the governments ambitious infrastructure development plan,
Oman will be able to promote itself as a regional business and tourism hub. Enhanced
infrastructure will further increase trade and commerce in the Sultanate, translating into healthy
and sustainable economic growth for the nation.
(Disclaimer: The views and opinions expressed in this article are solely those of the authors and
do not reflect the opinion of the Oman Daily Observer)
Roads a priority in Omans $14.8bn infrastructure spend
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Infrastructure projects that have been given top priority include the 265km multiphase Al Batinah Expressway with an allocated budget of US $2.6 billion.
However, this is only one of a number of projects that is likely to be discussed at the
third annual Oman Transport Infrastructure Summit 2013, which will also focus on
the implementation and construction of transportation networks across the
Sultanate with a focus on land transportation infrastructure.
During the Oman Transport Infrastructure Summit, the authorities will provide an
update on the ongoing and future land transportation projects and experts will
present innovative design, construction and maintenance technologies related to
roads, bridges and tunnels, say the organisers IQPC (in partnership with GEC
Global).
A snapshot of Omans infrastructure development includes $8 billion to be invested
for constructing 12,704km of road projects; $10 billion to be invested for developing
the national rail project with a vision to connect to other GCC (Gulf Cooperation
Council) countries, and seven tunnels to be constructed as part of Daba-LimaKhasab road project.
The Ministry of Transport and Communications intends to invest in state-of-the-art
technologies to develop higher quality and safer infrastructure along with special
economic zones developed in Duqm and Sohar, which requires huge infrastructure
support in the form of roads, bridges, tunnels and highways.
As part of the ambitious GCC railway project, the 1,061km Oman railway network,
to be completed by 2017, is a key component in facilitating domestic, regional and
international connectivity and increasing trade exchange while developing industrial
activities in the Sultanate.
The Ministry will develop the organisational and administrative structure for a
national railway organisation to overview the implementation of the $10 billion
programme. A consultancy company for the design and supervision of the railway
project and a project management consultant will be selected this year.
Oman Land Transport Infrastructure Summit 2013 brings together the project
owners, contractors, consultants, equipment suppliers and technology providers to
share knowledge and network. The summit will support Oman to develop its
infrastructure projects by implementing state-of-the-art technologies and products,
gaining on the success of the last two events, say the organisers.
Expert advisors for the event, being held in Muscat from 8-11 September, 2013,
include Howard Rosen, chairman, Rail Working Group; Anthony Pearce, honorary life
member and former director general, International Road Federation and Grant
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The weakening in hydrocarbons revenue is a structural problem that will soon expose significant
weaknesses in the country's underlying budget dynamics. This deteriorating fiscal position may
pose a threat to the government's ambitious capital expenditure plans in the near future.
The government's five-year spending plan (2011-2015) includes OMR30bln (USD78bln) of
expenditure, the majority of which will be allocated to social and transport infrastructure.
With regards to transport infrastructure, a long-term boost may come from the country's plans to
develop a national rail network. The project's cost is expected to run into billions of dollars, with
the first phase planned to be completed by 2017.
In the social infrastructure sector, significant investment has been targeted at water and energy
projects around the country.
The government has earmarked tourism as one of the key sectors that will drive its economic
diversification strategy. To this end, it has started to take a more active role, managing the
development of the industry and attempting to attract foreign investment.
The creation of OMRAN - a company established by the government to deliver major projects
and manage assets and investment in the sector - is an illustration of the government's new,
assertive approach. This tactic is complemented by Oman's favourable position as a relative
political safe haven in the region.
Transport Infrastructure
Oman's transport sector is heavily reliant on its extensive road network, as there are no operating
rail lines in the country. Oman has a road network stretching 45,985km, although a significant
proportion of this is unpaved. However, this is set to change, as the government invests in
transport projects to encourage tourism.
Road infrastructure
Road projects are the fastest-growing part of Oman's transport infrastructure sector, with
spending allocations for new road ventures of around OMR1.7bln. One of the biggest road
projects is the second-phase construction of the 240km al-Batinah coastal road.
Inter-Gulf Cooperation Council (GCC) Rail network
Plans to develop the country's railways have been a priority due to the proposed Gulf
Cooperation Council (GCC) pan-Gulf rail network. This is a USD25bln railway network that
will stretch over a 2,117km network, connecting the six countries of the GCC: Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia and the UAE. The network is intended to encourage travel and
increase trade in the region. Construction completion is scheduled for 2017.
Oman's section of the regional rail link will be the Batinah railway, which will run parallel to the
Batinah highway. The link will cover 260km from Muscat to the border with the UAE and it will
be a major boost to Oman's transport network.
Oman and the UAE have selected a 136km length of railway line connecting Sohar with the
UAE border for priority implementation. A 27km spur line to Buraimi will also be part of this
priority package. The total volume of freight likely to be handled by the international rail
network is estimated at 42mln tonnes in 2020, rising to 62mln tonnes in 2030 and topping 73mln
tonnes in 2040.
Airport Expansion
In December 2012, the government of Oman confirmed that Hill International had been awarded
an OMR41.8mln (USD108.5mln) contract to expand two airports in the sultanate. The company
will be responsible for consultancy services and supervision works for Muscat International
Airport and Salalah Airport projects, according to Minister of Transport and Communications
Ahmed bin Mohammed al-Futaisi.
The development of Muscat International Airport is worthUSD1.8bln, with the project at Salalah
Airport project requiring an investment of USD765mln. The airports will have the capacity to
cater for 12mln and 2mln passengers per annum respectively upon completion which is
scheduled for end-2014.
Port Investments
Oman's ports are an important component of the country's transport sector. The country has two
major ports: the Port of Sultan Qaboos in Muscat and the Port of Salalah. Another up-andcoming port is the Port of Sohar, located near the Straits of Hormuz, which is undergoing a
USD12bln investment project, making it one of the world's largest port development projects.
Part of the expansion project will be the construction of a 70-hectare container terminal at the
Sohar Port, which will have a capacity of 1.5mln TEU's and cost approximately OMR50mln
(USD130mln) to complete. The construction commenced in April 2013 by Oman International
Container Terminal (OICT) and is scheduled to be operational by January 2014.
Conclusion and Outlook
Omans construction and infrastructure sectors have defied the global recession thanks to
financial backing from oil-fuelled state coffers. The industry grew by an impressive annual
average of 25.2% between 2005 and 2010. However, the tide started to turn when real growth
dropped to 1.6% in 2011. For 2012, Oman's Central Bank has reported construction industry
value at OMR1.45bln, which represents an estimated real growth of only 1.8%. In 2013, we
expect a slightly higher growth rate with construction industry value reaching OMR1.53bln.
Despite continuing political unrest in the wider Middle East region, Oman has remained highly
insulated. This has allowed the tourism industry to expand and we expect the sector to continue
to attract investors who are prepared to finance the building of the infrastructure required to cater
for the growing number of visitors.
Much like in the construction industry, Oman's economic growth has been highly volatile over
the last decade. The country reported highly impressive double-digit growth in 2008 but we
expect a more moderate growth in 2013 and 2014 at 3.2% and 3.5% respectively.
Overall, underpinned by government spending and a burgeoning tourism industry we expect a
moderate but consistent construction growth moving forward - an outlook enhanced by Oman's
position as a relative regional safe haven.
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UAE. dmg events announced the results of a commissioned study conducted by Ventures ME
which revealed that construction projects across all building sectors worth US$67.6bn were
completed in the GCC in 2014.
The research also looked into 2015 and estimates projects for US$72bn (+6.5%) to be completed
and US$103bn (+21.2%) to be awarded across the year.
This is the fourth consecutive year that dmg events, the company behind INDEX - the leading
MENA Design exhibition and workspace at INDEX, has invested in the study, contributing to
the global industry with useful regional market insights.
Overview of 2014 GCC Building Construction Projects
2014 was another strong year for the construction market with residential (41.5%), commercial
(16.97%) and educational (10.6%) segments representing the highest market shares. US$67.56bn
worth of projects were completed with a further US$85bn worth of projects awarded.
Hospitality, medical and retail buildings were also completed with total values of US$4.4bn,
US$3.72bn and US$854mn respectively. The top markets across all sectors bar retail were KSA
and the UAE, with Qatar ranking top with completed retail projects worth US$362mn.
Overview of 2014 GCC Interior Contracting and Fit-out Market
The value of the GCC Interior Contracting and Fit-out Market in 2014 was US$7.35bn with
KSA and the UAE showing the highest market share within the industry. KSA was the highest
ranking market with a 43 per cent share (US$3.4bn) followed by the UAE valued at US$2.3bn
and representing a 31% market share.
For the second year running the residential sector accounted for almost half of the overall 2014
market with a market share of 41.95 per cent (US$3.09bn). The commercial sector followed with
a 17.15 per cent share corresponding to a value of US$1.26bn and the hospitality sector with
13.51 per cent share and a value of US$993mn largely unchanged when compared to 2013.
2015 Forecast
Looking ahead to 2015 projects, the Ventures ME Report highlighted that figures across both the
building construction and interiors markets are both set to increase further.
US$72bn worth of completed projects and US$103bn worth of awarded projects are forecasted
over the next 12 months; the interiors market is also likely to grow by 9 per cent.
Building Construction Market
The Healthcare Sector is expected to grow by 91.12 per cent from a value of US$3.72bn
registered in 2014, to an estimated value of US$7.11bn for 2015. Qatar in particular will be the
country with the majority of healthcare buildings completed worth a total value of US$2.43bn
-followed by KSA with US$2.15bn and the UAE US$1.82bn.
Despite the huge increase in the Healthcare Sector, the building construction market will still be
led by the residential and commercial sectors that together will account for over half of the
market share concentrated particularly in KSA, the UAE and Qatar.
Interior Fit-out Market
Out of an overall estimated market value of US$7.35bn, the Residential Sector will account for
41.95 per cent and US$3.09bn in value, followed by the Commercial Sector at 17.15 per cent and
US$1.26bn of value and the Hospitality Sector with 13.51 per cent and US$99mn in value.
When compared to 2014 figures, the Healthcare Sector will see the biggest growth with a huge
91.6 per cent increase and reaching a value of US$569m. The Education Sector is expected to
see the biggest drop in value by -13.72 per cent from US$571m to US$492m.
Commenting on the figures released by Ventures ME, Frederique Maurell, Group Event Director
for INDEX and workspace at INDEX, said: 2013 was a strong year for the GCC Building
Construction market with almost all sectors showing significant growth.
For 2014 weve seen continued growth with KSA, the UAE and Qatar doing particularly well.
Looking ahead to 2015 the forecast for both awarded and completed projects shows further
increases again with particularly exciting times ahead for the Residential and Commercial
Sectors.
The full GCC Building Construction and Interiors Update from INDEX and Ventures ME,
valued at $2,500 can be downloaded for free via the INDEX website
(http://www.indexexhibition.com/exhibit/industry-reports/)
The 25th edition of INDEX International Design Exhibition and the 14th edition of workspace at
INDEX will take place at the Dubai World Trade Centre on 18-21 May 2015.
For further information visit www.indexexhibition.com / www.workspace-index.com
Photo caption: Frederique Maurell, Group Event Director for INDEX and workspace at INDEX
About INDEX:
The INDEX International Design Exhibition is the largest event for the architect and design
industry in the Middle East. It attracts more than 700 exhibitors from 50 countries, taking place
at the Dubai World Trade Centre.
Celebrating its 25th anniversary year, 18-21 May 2015 at the Dubai World Trade Centre, INDEX
provides an unrivalled business and networking opportunity for buyers and sellers of residential
interiors products and services from around the world to source an astounding array of the very
latest design innovations, trends and techniques.
More than just an exhibition, the event provides attendees with unrivalled access to information,
intelligence, contacts and hands on experience. Experts from around the world engage in the
industry's most topical discussions, finding design solutions, facing challenges and seizing
opportunities. The show is the gateway to the Middle East and North Africa (MENA) providing
both exhibitors and visitors with the opportunity to conduct serious business with like-minded
professionals.
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UAE. A snapshot of opinion from the GCCs construction sector the majority of which are
involved in larger projects with a value of over AED 100 million has indicated that optimism
amongst the construction sector has been tempered over the last year.
Pinsent Masons Annual GCC Construction Survey, which was presented to representatives from
the industry at the international law firms recent Annual Construction and Engineering Law
Conference, held in Dubai, suggests that the industry remains overwhelmingly optimistic about
2015 with 77% of respondents stating they were optimistic. However, their optimism has fallen
by 13% from last year.
The drop in positivity may partly be explained by ongoing geopolitical concerns, the fall in oil
prices, a highly competitive market with a softening in the level of increased order books, and
the cost of accessible capital. This years survey indicated that 33% of respondents were
expecting an upswing in their order books of 10% or more, which compares to over 40% last
year expecting that level of growth.
The tempering in optimism may also be related to the industrys more measured view about the
positive impact Expo 2020 will have on the sector. Less than 10% of respondents thought that
the UAEs Expo project between 2014 and 2016 would provide a dramatic upswing for
construction companies. This compares to last year, when 26% of firms believed Expo would
provide a major boost between 2016 and 2020.
Saudi Arabia (40%) followed by the UAE (33%) and Qatar (14%) are expected to be the
strongest performing construction markets in the MENA region next year, according to those
surveyed.
The expectations for Saudi Arabia are particularly encouraging as they are now starting to align
with the industrys perception around the ease of doing business in the country. 23% of the
responses stated that Saudi Arabia was the easiest regional market to do business with, which
compares to just 10% of respondents last year.
The survey indicated that Oman is perceived as the second easiest market to do business with,
but the UAE, at 96%, is by far the industrys easiest market work with. Oman also showed a
significant increase in expected market opportunities more than in any other previous survey.
Transport (69%) followed by real estate (48%) and power (46%) were considered to be the
strongest sectors in terms of opportunities for the year ahead.
It is clear from the results that stakeholders believe the regional sector needs to do much more to
rebalance contracts to a sensible risk profile. Aligned to this, the results raised a very real
concern as to the efficient and effective administration of contracts in the sector as compared to
other regions of the world.
Commenting on the results, Sachin Kerur, Managing Partner, Gulf Region at Pinsent Masons,
said: These results offer an insight into how the GCC construction market is shaping up for the
year ahead. Optimism clearly remains high, but there is a marked cooling compared to last year
when Expo fever was at its height.
Construction firms have long perceived the opportunity in Saudi Arabia as being the most
promising in the region. But, in the past, the challenge of doing business there has meant
opportunities havent always come to fruition. This situation now seems to be changing, with the
ease of doing business starting to improve. This suggests we may see more opportunities
converting within The Kingdom in the years ahead, which chimes with the more open sentiment
emerging from the Saudi authorities.
61% of responding construction companies said that they had been involved in fewer disputes
in 2014. Thats encouraging for businesses. However, we are not surprised to see a real concern
around the administration of contracts. The regional sector would do well to acquire a more
sensible attitude in promoting risk equilibrium in construction contracts and to take a more
collegiate approach in the delivery of major capital assets. This is an issue that has rumbled on
for many years and needs an enlightened approach to solve.
Following last years survey results we expected to hear more about public-private partnerships
(PPPs) becoming an increasing part of the financing mix. However, PPPs have yet to take off
across the board as a primary method to fund major projects in the region. We expect this to
change.
Pinsent Masons 2014 survey also asked construction firms which peer firms they most admired.
The results suggested CCC, Emaar and ALEC were the pick of the bunch.
About Pinsent Masons