The booming boom: Gulf building construction industry.

The Gulf area’s building construction industry is continuously blooming. The confidence with which the Middle Eastern building construction sector is operating is largely due to high levels of liquidity triggered by lucrative oil prices ever since early 2011. High oil revenues in conjunction with low-interest rates made for a very fruitful soil for yet another boost of the Gulf’s building construction arena. No doubt the Arab Spring counter-revolution has accounted for additional stimulation of building construction investment. As confirmed by the findings of Building Radar’s research analyst Carim Schuhmacher, emphasizing building construction had therefore been used as a strategic political tool underscoring local governments’ desire to accommodate the needs of their peoples.

Private and Public sectors: an immaculate performance

Not only the public sector has heavily committed to the building construction industry, but also a variety of privately conducted real estate projects are currently underway. The vast array of XXL building construction projects conducted significantly outshines the post-crisis era in which the private sector only scarcely invested and many projects had been canceled.

Most countries affiliated with the Gulf Co-operation Council (GCC) had their public sectors spend continuously after the 2008 real estate market crash. In accordance with Qatar National Bank (Hyperlink http://www.qnb.com.qa/cs/Satellite/QNBGlobal/en/enGlobalHome) GCC spending gradually increased, year-by-year, over the past ten years. At the same time output in the local building construction sectors substantially grew in the past six years, reaching its first peak already in 2012 at 5%.

The future remains bright with both, elevated public and private spending that will account for a continuous increase in building construction projects in the Gulf area. With reference to our custom made analyses for the area, investment is believed to remain increased. The overall value of currently on-going projects within the GCC total approximately $ 1.7 trillion. In addition, we found about $ 900 billion will be spent on local building construction projects until 2020.

Qatar’s future

The gulf building construction boom was primarily lead by Qatar and Saudi Arabia, whose building construction sectors grew by around 10% on average after the crisis and have, ever since 2013, significantly accelerated. The building construction industry’s upswing in these countries was fundamentally motivated by heavy expansions of urban areas and infrastructure. Qatar solely is believed to spend another $ 200 billion on building construction projects related to the 2022 FIFA World Cup. Furthermore, Qatar’s population is virtually exploding having hit almost 2.2 million as of today. The tremendously growing population levels naturally ask for major building construction developments. Lusail City for instance, that is described as Qatar’s future, will be a northern suburb of the capital city of Doha accommodating 200.000 people.

Saudi Arabia: economic spread and diversification

Building Radar’s research has shown, that a greater emphasis on infrastructure projects in the cities of Jeddah and Riyadh has been equally beneficial for the building construction sector in Saudi Arabia. Simultaneously the Saudi Arabian government has initiated the redevelopment of Mecca’s Grand Mosque as well as additional accommodation for pilgrims that will total an investment of $ 27 billion. Moreover, at present, we are witness to a series of economic young-guns on the Saudi Arabian map. This development has helped spread and diversify population all over the country and may be regarded as an exceptional building construction boost. King Abdullah Economic City on Saudi Arabia’s west coast is the most prominent of its rising stars. Building construction spending totaled around $ 90 billion, including an entirely new port. Saudi Arabia’s private sector has been thoroughly active as well- in 2017 Prince Alwaleed bin Talal’s Kingdom Tower will be completed marking the opening of the then tallest building in the world at a height of 1km.

UAE back on the pitch with a claim to fame

Prior to the real estate crisis, the United Arab Emirates were the biggest kid in the building construction arena; yet the bursting bubble also affected them the most. Most building construction projects had been undertaken by the private sector as well as state-owned construction developers who were immensely leveraged with debt resulting from the crisis. Saudi Arabia and Qatar, on the other hand, had been primarily founded by hydrocarbons revenue. As soon as the hit crisis hit many building construction projects no longer seemed feasible.

In spite of the UAE’s temporarily recession state-lead building construction has seen a novel upswing based on substantial spending made possible by Abu Dhabi’s extensive oil revenues. Indeed UAE building construction contracts have, for the first time since the crisis, exceeded those of Saudi Arabia totaling $16 billion in 2012. Mohammed bin Rashid City is one of the most prominent building construction projects featured amongst the many building construction projects planned over the next decade. Bin Rashid City will include the world’s largest mall, a Universal Studios theme park as well as hotels in excess of more than 100.

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Join the discussion 5 Comments

  • Peter Wright says:

    I liked the analysis. I posted last week that it would be interesting to here more about the boom in arabia. I appreciate to find it now. I will continue to check your posting!

    Regards from Scotland. Peter Wright

  • Peter Wright says:

    However what’s your posting strategy (e.g. weekly, monthly…)? Sure for your regular readers it would be good to know.

  • Sourav says:

    I appreciate this article…Analysis report is great for those 3 different places… Good job.. Looking forward to your upcoming blogs…

  • adam says:

    There is huge progress in construction in each and every country. A very good analysis to represent that gulf countries are also in progress. According to article there is huge investment in construction as compare to Oil production factories. Good work !!!

  • Jacky J says:

    Gulf building construction industry is booming now. The main player behind this is GALFAR founded by Dr P Mohamed Ali . He has played an important role in development of UAE and its educational system as well. Read more on [LINK DELETED BY ADMIN]