Survey: GCC market sentiment rises despite continued challenges
Overall sentiment in the GCC’s construction sector has improved over the last two years by about 7%, though concerns continue
Overall sentiment in the GCC’s construction sector has improved over the last two years by about 7%, though concerns relating to delayed payment, the rising cost of capital, and increased number of disputes, continue.
According to recent findings from Pinsent Masons’ GCC Construction Survey, the UAE remains the number one market expected to deliver growth in 2018, with 38% of respondents expecting the country to provide the most opportunity over the next 12 months, compared to 35% in 2016.
The findings of the survey were presented to industry professionals at the Pinsent Masons' Annual Construction and Engineering Law Conference, the report provides a snapshot of opinion from the GCC construction sector where the majority of the companies are involved in projects with a value of more than $136m (AED500m).
Sachin Kerur, head of Middle East Region at Pinsent Masons, said: “Optimism towards the GCC’s construction sector saw an increase from our 2016 survey, despite ongoing challenges with lower oil pricing and headwinds facing the private non-oil sector.”
He added: “The UAE is set to see an increase in the number of projects during 2018 and we expect the country to remain in top position, particularly in the lead-up to Expo 2020.”
While the survey indicates a slight rise in overall sentiment, the findings revealed that 20% of those surveyed across the GCC expect their order books to decline by more than 10% in the coming months, compared to 16% two years earlier.
Asked about contract conditions, 86% of businesses said they had become less favourable during 2017, representing a similar sentiment in 2016 which stood at 92%.
In addition, 86% of companies said payment periods were longer in 2017 compared to the same time last year while 67% of respondents stated they were involved in more disputes during 2017 than had been expected before the year started, as compared to 59% in 2015.
The suevy also indicated a positive sentiment towards Saudi Arabia, with 29% of respondents expecting the kingdom to provide the most opportunity over the next 12 months, compared to just 11% in 2016.
“Whilst analysts predict a slight economic revival across many GCC markets during 2018, the survey results are indicative of what has been a challenging time for the construction sector - which has grappled with the impact of lower oil prices and ongoing geopolitical tensions,” Kerur said.