The GCC construction sector must remain malleable
It’s all too easy to lament change within our industry; the construction firms that welcome and adapt to market shifts are those that tend to reap rewards in the long term
For better or worse, the Middle East’s construction sector is changing. In fairness, ’twas ever thus. The Gulf has transformed itself into a global commercial hub within what is – relatively speaking – a miniscule amount of time. Moreover, the region is working diligently to ensure that it continues along this upward trajectory.
To suggest that our industry has ever been anything other than fluid is, quite frankly, untrue. The construction sector’s willingness to adapt has been one of the foremost enabling factors in the Middle East’s meteoric rise. However, the contention that the market has seen less difficult times is perfectly justifiable. The halcyon days of the mid-2000s still occupy a prominent position in the construction sector’s collective memory, and rose-tinted comparisons with today’s more challenging climate are inevitable.
But even in the lead-up to last decade’s Great Recession, the Middle East’s construction sector was far from stable. Contractors, consultants, and suppliers were being asked to deliver projects within ever-shortening timeframes and, according to some, having money thrown at them in order to do so.
The challenges involved in rising to the top of that market may have been more pleasant than those currently facing our industry, but they were still challenges.
In today’s market – as was the case 10 years ago – the companies willing to confront these challenges head on are the ones that will, ultimately, reap the rewards. Of course, the ability to anticipate and adapt to market shifts is not easy to develop, but neither is it an impossible feat.
This week, I’ve been looking into the construction equipment rental segment (page 18), the global value of which is on course to pass $75bn by 2024, according to research from Global Market Insights. In the Middle East, this market offers an ideal example of the dichotomy that is facing the wider construction industry – namely, whether to resist or embrace change.
In short, it is becoming increasingly common for regional end users to rent, rather than buy, machinery. Low market liquidity, project uncertainty, and the increasing prevalence of shorter-term contracts, are serving to drive this shift.
In recent years, I’ve heard several manufactures and distributors speak critically about this trend. ‘Gone are the days,’ they lament, ‘when contractors would place a single order for hundreds of units.’ And I sympathise with that complaint; life must have been a lot easier when customers could afford to write sizeable cheques at the drop of a hat.
But while those firms complained, others began to expand their procurement options, developing products and services to suit their customers’ changing needs.
To resist change is as tempting as it is futile. Yes, we may have liked things the way they were but, if our industry takes appropriate action today, there’s every chance we’ll enjoy how they turn out.