Middle-east Arab News Opinion | Asharq Al-awsat

Public spending leads to Gulf construction boom | ASHARQ AL-AWSAT English Archive 2005 -2017
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File photo—A view of the King Abdullah Financial District in Riyadh, Saudi Arabia on October 9, 2013. (REUTERS/Faisal Al Nasser)


File photo—A view of the King Abdullah Financial District in Riyadh, Saudi Arabia on October 9, 2013. (REUTERS/Faisal Al Nasser)

File photo—A view of the King Abdullah Financial District in Riyadh, Saudi Arabia on October 9, 2013. (REUTERS/Faisal Al Nasser)

Jeddah, Asharq Al-Awsat—The Gulf construction sector has witnessed significant growth over the past year, primarily as a result of state-sponsored projects, economic experts informed Asharq Al-Awsat.

One expert said: “The construction sector in the Gulf region has recorded noticeable growth in the past year, mainly due to large construction projects undertaken by regional governments,” adding, “This has helped the industry recover from last year’s decline.”

Experts predicted that the value of regional construction projects over the next 5 years will stand at approximately USD 800 billion.

These construction projects will include infrastructure and services, which in turn will support the growth of related sectors, such as construction equipment and materials.

Jens Bawidamann, the Gulf regional director for Putzmeister—a German manufacturer of concrete pumps—informed Asharq Al-Awsat that the construction sector within the Gulf Cooperation Council (GCC) states has developed at a rapid pace over the past few years.

“The region is witnessing sustainable growth, which will strengthen its future presence,” he said.

For his part, Martin Kirby, managing director of Wolffkran Arabia—a company that specializes in renting tower cranes for construction—said that the major contributors to this Gulf resurgence in the construction sector is the GCC, particularly Saudi Arabia and the UAE.

“There are large construction projects in the Gulf, which helps to initiate many smaller projects. These smaller projects complete the larger ones,” he said.

Kirby added that the Gulf construction sector will continue to grow and develop, reaching new strides by the end of next year.

Many of the mega-projects being undertaken across the region are spread across different sites and locations, and include infrastructure projects to build new roads, ports, railways, and airports.

In exclusive comments to Asharq Al-Awsat, economist Mutasim Ahmed said that the construction sector in the Arab Gulf is expected to grow by 35 percent by 2015, thanks to a number of huge government-backed developmental projects coming to completion.

Ahmed also praised the role of foreign investment in the region, adding that this has a positive effect on the construction sector. He said that the government support of the Gulf construction sector, in addition to foreign investment, will allow the industry to overcome any future challenges, including an expected increase in labor costs.

Saudi Arabia is set to host a special conference focusing on construction and development projects in Riyadh on November 24, 2013. Industry specialists will attend the conference, which will act as a forum for key discussions regarding how to continue developing the sector and how to confront future challenges.

Saudi Arabia’s construction sector accounts for the lion’s share of the investment currently taking place in the Gulf, with the Kingdom sponsoring a number of large developmental projects.

Riyadh is currently sponsoring the world’s largest railway construction project, the North South Railway, which is a 1,418 km railway network linking Riyadh to Haditha (close to the Jordanian border).

The Kingdom also announced SAR 487.5 billion for the development of housing, infrastructure, and transport, earmarking a total of SAR 247.5 billion for housing development, SAR 61.875 billion for transport expansion, and SAR 7.5 billion for road construction. While the Saudi General Authority of the Civil Aviation set aside SAR 2497.5 million for the construction of 34 airports across the Kingdom over the next 5 years.