The value of Gulf projects under development has breeched the $2 trillion mark for the first time, shrugging off concerns that soaring construction costs would weigh on the sector, according to the Middle East Economic Digest (Meed).
Despite fears that rampant price escalation for labour and raw materials such as cement and steel would hamper growth in the Gulf’s booming project development, investment in the region’s major sectors has risen in value by a staggering 40% over the past year, according to the Meed Project Index.
“Despite fears that the bubble might burst at any moment, business in the Gulf is still booming,” said Simon Howard, general manager of Meed.
“The last 12 months have seen huge investment poured into the region, with such developments as Masdar City and Saadiyat Island allowing Abu Dhabi to emerge as a market packed with the potential to one day rival Dubai as the bustling tourism centre of the UAE.”
The Meed Projects Index monitors investment within the construction, oil and gas, petrochemicals, power and water and waste sectors.
Of the total projects tracked by the index, however, only one quarter are currently under construction, which implies a further three to five years of “intensive construction activity to come”, according to Meed.
The UAE remains the powerhouse of Gulf, accounting for more than one-third of total project value and posting the highest growth with a 46% increase in the value of projects in the emirates.
“Such stand out success in the UAE indicates that there is still room for copious more investment in the surrounding GCC countries,” said Howard.
Other major projects cited by Meed as pushing the total value over the $2 trillion mark include Sudair Industrial City in Saudi Arabia ($40 billion), Dilmunia mixed-use development in Bahrain ($4.2 billion) and Limitless’ Al-Wasl development in Riyadh ($12 billion).
Broken down by sectors, construction by far outpaces the others with more value in projects for that sector than all others tracked by the index combined.
The construction sector accounted for a total of $1.2 trillion worth of projects, while oil and gas, petrochemicals and power contributed $430 billion, $135 billion and $134 billion respectively.
Industry accounted for $70 billion, the report said, while the value of water and waste projects reached $40 billion.
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