Tough year ahead for GCC construction, expert says
Benjamin Highfield, Senior Vice President, Hill International, predicts another tough year for the regional construction sector, as oil prices to remain depressed
Industry leaders are expecting another tough year for the construction industry as oil prices continue to affect the regional market. Hill International’s SVP, however, continues to see strength in his company’s business this year.
Benjamin Highfield, Senior Vice President, Hill International, said at a conference last week: “Last year, market wise, was a terrible year. You can see that with the number of people that had to leave the Middle East, and find their fortunes elsewhere.”
Highfield said that the construction industry continues to suffer as a result of low oil prices, a trend he does not expect will change in the coming year.
“Of course this is an oil price driven matter, and that circumstance is going to continue in 2017. I personally don’t see that the liquidity through oil price is going to improve.
“There are external factors that are at play, one of which is the continuing improvement in the extraction rate of shale oil. Ten years ago you wouldn’t have really considered shale oil to be that viable, now, in the US in particular, you have extraction prices at 40% per barrel.”
He added, however, that though oil prices remain depressed, he is seeing an underlining increased focus on renewables, with several nuclear power stations coming online in the next couple of years.
“The downward pressure on oil for me is going to remain, whether or not it goes back to the lowest levels, I am not sure,” Highfield said.
Despite the depressed market outlook, Highfield said that Hill International has not been severely affected by the current market environment and continues to have a stronghold within the sector.
He said: “Hill International is quite different because we deal with the disputes that arise out of these problems. Because of that, there is some immunity to the drop in construction turnover.
“We are however affected by the fact that our clients have poor liquidity and perhaps budget wise cannot invest as much in the dispute in terms of resolving it.
“I see 2017 being another strong year for us, we grow on average 10% per year,” he added.
Highfield said that Hill will continue to work on a number of projects across the region and is also in talks with a number of parties for future work on the Al Maktoum International Airport, though there is nothing confirmed as of yet.
Last week, Hill International announced the split of its consultancy business as an independent entity, launched under the name of HKA.
“We will in two months’ time be wholly independent of Hill, we will be a stand-alone company based out of Britain. And we’ve been purchased in a management backed private equity transition,” said Highfield.