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What RICS's Q2 2019 study means for Middle East construction jobs

EXCLUSIVE: RICS's latest outlines what built environment professionals in the GCC look forward to in 2020 and beyond

The UAE remains a key market for construction jobs.
Pixabay
The UAE remains a key market for construction jobs.

Despite relative uncertainty driven by oil price fluctuations, the Middle East’s construction sector remains an attractive market for global built environment professionals. Indeed, as managing director for the Europe, Middle East, and Africa at Royal Institution of Chartered Surveyors (RICS) told Construction Week in December 2018, projects in the Middle East – particularly the GCC – present truly unique opportunities for construction professionals to enhance their skillset.

Speaking following the reveal of Construction Week’s 2018 Salary Survey last December – which found, among other trends, that 45% of the respondents had lived and worked in the GCC for six to 15 years – Jackson said: “Many of the projects in the GCC are large, complex and challenging which present a great opportunity for professionals to work on major schemes and in doing so acquire new skills and experience that they may not have had the opportunity to experience in their home market.”

At the time, Jackson had expressed optimism that many such engineers would continue to plan a long-term future in the GCC given project launches expected during 2019 and beyond. However, attracting talent is only one aspect of a recruiter’s focus, and retaining skilled professionals – many of whom may have fortified their competencies whilst working with their local employers – must continue to be a priority in the Mena region.

Jackson, authoring an exclusive comment piece in the 2019 Construction Week Power 100 edition (CW #745), explained how in a marketplace “made primarily of an expatriate workforce […] ensuring staff are competent in their chosen discipline” can help drive efficiencies and mitigate risk. 

“The way in which people do business is changing, and many of the traditional roles in the construction industry will be unrecognisable in a few years,” Jackson wrote, adding: “Equipping employees with key skills and industry best practice benefits organisations and employees alike.”

REGIONAL WORKLOAD OUTLOOK

RICS’s Middle East Construction and Infrastructure Survey Q2 2019 shows that while “most markets in the Middle East saw work on infrastructure booming”, select GCC markets continue to face challenges related to local requirements. This quarter also saw the introduction of RICS Consensus Expectations, which account for tender prices and construction costs, and labour and material costs, for the next 12 months.

As the survey explains, “respondents in Oman indicate that the Omanisation policy has introduced bottlenecks into the market, and contributors in Bahrain state the imposition of a 5% value-added tax has dampened their economic activity”.

The study adds: “In contrast, Saudi Arabia has a more optimistic outlook which respondents feel is partly due to Saudi Vision 2030 acting as a catalyst for activity in the country, with workloads increasing across the board in the second quarter.

“In the UAE, the increase in infrastructure activity, particularly on road and rail projects, is supporting a broader growth in work, with contributors expecting the outlook for the next year to remain upbeat and workloads also increasing over this period, for both infrastructure and non-infrastructure activity.

“Workloads in Oman are also expected to rise, driven by work on infrastructure projects; however, firms are likely to continue to cut headcounts in the sultanate.”

These market conditions are also expected to impact labour costs – the RICS Consensus Expectations section of the Q2 report shows that skilled labour costs were likely to rise by 1.8% in Oman over the next 12 months, with Saudi Arabia and UAE to respectively note hikes of 3.8% and 0.9% during
the period. The most significant growth in skilled labour costs will be witnessed in Egypt, where data drawn from a small sample estimates that skilled labour costs will rise by 7.7%.

RICS’s Q2 report also found that “there is little difference in the outlook for the cost of skilled and unskilled labour” in GCC markets – a trend that it says is “drastically different than in most Asia-Pacific markets, where companies are expected to pay a significant premium on skilled labour”.

Profit margins are likely to remain under pressure over the next 12 months, and this may impact hiring activity in the region. Moreover, labour and skills shortages seem to be impacting Saudi Arabia, with RICS stating that quantity surveyors and skilled tradespeople being among the most demanded construction professionals in the kingdom during Q2 2019. These shortages were also cited as constraints holding back activity in Saudi Arabia’s built environment, RICS’s Q2 2019 study adds.

However, RICS remains optimistic, pointing out that despite market challenges, Saudi Arabia, Kuwait, and the UAE are displaying optimism and are expected to see workloads increasing over the next year.

Moreover, regardless of the overall activity outlook, the region’s foremost construction employers will have to continue investing in their workforce to retain their position at the top, as Jackson explained this June: “Being an expert in one subject is no longer sufficient, with professionals having to keep ahead of industry developments to allow them to compete at the highest level in the marketplace.

“With the emergence of technologies such as building information modelling, 3D printing, smart buildings, and drones, and rapidly evolving sustainability requirements, organisations must keep themselves updated with developments in the market and industry best practices.

“The construction sector is moving towards a more collaborative approach to project delivery, and developers are looking to consultancies and suppliers to ensure their projects have a competitive edge.”

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