Wednesday, March 10, 2010

Heavy investment in infrastructure helping to reduce contraction in construction industry, say organisers of CityBuild Abu Dhabi

Governments lead the way in GCC projects

Heavy investment in infrastructure helping to reduce contraction in construction industry, say organisers of CityBuild Abu Dhabi

Government-led investment in major infrastructure and strategic projects is helping to reduce contraction in construction activity in the Gulf Co-operation Council (GCC) countries, according to the organisers of CityBuild Abu Dhabi, a new trade show for the region’s building and construction industry, which takes place from 18-21 April 2010 at the Abu Dhabi National Exhibition Centre.

“Government or government-related investment in shipyard, seaport and airport expansions; new hospitals, colleges and universities; as well as major road upgrades now make up a significant and growing proportion of the region’s construction activity,” said Graham Wood, Group Director of CityBuild Abu Dhabi.

The first CityBuild Abu Dhabi will bring together industry suppliers, manufacturers, distributors, architects, engineers, importers and procurement decision makers. CityBuild Abu Dhabi will debut alongside Cityscape Abu Dhabi, the international real estate investment and development event.

“The Proleads report highlights the importance of CityBuild, especially in this challenging economic climate. Besides potential business discussion and contract negotiation on the exhibition floor, the CityBuild Abu Dhabi Construction Summit will address the key industry issues over two days through transparent debate and invaluable networking opportunities,” added Wood.

Evidence of the increasing importance of governments’ directly or indirectly boosting demand through the implementation of major infrastructure and strategic projects can be seen in the table of top five projects in each of the six GCC countries that went into construction in 2009 produced by industry intelligence service Proleads. (SEE TABLE)

“The Q4 2009 report published by Proleads features a table of projects varying in value from $50 million to $5 billion. It shows that in most of the six GCC countries it is infrastructure-related projects that are leading the way, funded by government ministries, authorities or government-related entities. Although the entire GCC has been affected by the global downturn there are still tremendous opportunities throughout the region,” added Wood.

Putting the current construction picture in to perspective on a Middle East basis, Emil Rademeyer, Director, Proleads Global, said there are around half a trillion dollars worth of building projects in the region. Of these, 48% are being executed, 27% are in the pre-execution phase while 20% are on hold and 5% are cancelled.

“Of all the GCC countries, Saudi Arabia and Qatar have been the least affected by the global downturn,” he added. “With a large and young population, Saudi Arabia has domestic demand that will ensure growth in all sectors as young Saudis enter the workforce every year.

“The government has prioritised job creation. This in turn requires heavy investment in infrastructure such as power, water, utilities, transport and healthcare. In addition, with the oil price comfortably above $70 and forecast to remain there, many infrastructure projects are certain to come to fruition. Therefore, the medium term outlook for Saudi Arabia in particular is positive.

“Qatar, with massive revenues from gas, has probably the least worries about liquidity in the GCC. Isolated by long term pricing agreements, Qatar remains unaffected by oil commodity fluctuations. Moreover, the Qatari government is working to ensure its infrastructure will rival the best in the region.

“Although the UAE has been hit, in particular Dubai, the level of construction work nevertheless is still the highest in comparison to neighbouring countries. Thanks to Abu Dhabi, 2010 will be a lucrative year for the Emirates. Longer term demand may take a few years to catch up with increasing building supply coming onstream.”

Wood added: “With an industry summit, product demonstrations, the ‘Innovation Zone’ and an industry awards programme, CityBuild Abu Dhabi has to be one of the most eagerly anticipated shows for the regional building and construction industry.”

The founding sponsor of CityBuild Abu Dhabi is Kludi RAK. The Summit silver sponsor is BASF’s Construction Chemicals division. The event is also supported by the UAE Contractors’ Association, the Middle East Drymix Mortar Association and the Chartered Institute of Building.

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