Oman construction sector fragile, says reportby Rana Jimaa on Jun 20, 2011
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Despite considerable momentum in the infrastructure market, with a number of projects underway and in the pipeline, Oman’s construction sector is not living up to expectations, according to a report by Business Monitor International (BMI).
BMI's Oman Infrastructure report 2011, says evidence shows that there is slow progress in the industry as the financial results of Oman’s largest cement companies continue to show dismal losses.
Oman Cement Company announced a 77% drop in fourth quarter profits and Raysut Cement announced a 62% fall in fourth quarter 2010 sales. However, this was expected as the country’s cement producers were faced with major competition from oversupply in the UAE leading to price cuts.
Despite losses in the sector, there is still optimism for Oman’s construction industry. The report states the sector will start to pick up towards the end of 2011, driven by commercial, residential and infrastructure projects, including Oman's new five-year spending plan (2011-2015), which foresees $78bn invested in hospitals, education and roads.
Also, the recent announcement that $8bn will be spent on property developments including hotels, a shopping mall and a convention centre shows that the country may be through the worst.
The country’s largest property development, the $3bn Wave Muscat is back on track, following a slow 2009 and 2010, but it was recently announced that it will be completed later than planned, which means recovery remains shaky.
Progress has also been made over the last quarter on the Duqm Airport, the Salalah Port, construction of a national rail network and the Sur independent power project (IPP).
The latter factors show that there is still major potential over the medium term in Oman’s construction sector, but despite this optimistic outlook, recovery is still fragile, says the report. If the disappointing results of the fourth quarter of 2010 continue then it means weakness in the sector will remain.
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