UAE construction sector set to grow by 3.8% in 2021: Linesight Middle East

Ciaraen maclorkyThe UAE construction industry is expected to grow by 3.8% in 2021, with Saudi Arabia’s construction industry to be buoyed by significant funds invested in the tourism industry as part of the Saudi Vision 2030, according to Linesight’s market research

Ciaran McCormack, regional director for Linesight Middle East, said, “According to GlobalData, the UAE construction sector recorded growth of 3.3% in 2019. Pre-COVID, this figure was expected to increase to 4.3% in 2020, predominantly driven by a range of government initiatives. With the onset of the virus and the subsequent drop in oil prices, output is expected to contract to 1.9% this year, before recovering to 3.8% in 2021.

In Saudi Arabia, spending on infrastructure alone in the next 20 years is expected to top US$1.1 trillion. Several multi-billion-dollar infrastructure projects relating to Saudi Vision 2030 and the country’s drive to become a tourism hub, have lifted the construction industry. 

These projects include the US$500bn NEOM project, US$20bn Diriyah Gate Development, US$10bn Red Sea Development, and the US$5bn Qiddiya Entertainment project. 

“As a result of the IPO of Saudi Aramco and the Public Investment Fund (PIF), we expect to see sustained investment in the construction industry, a result of a significant number of projects alongside the ongoing megaprojects, which will keep the industry buoyant,” added McCormack.

Elsewhere in the GCC, the construction industry is expected to witness a sharp contraction. According to Linesight, the annual GDP from construction in Bahrain fell slightly from US$631mn in Q4 2019 to US$624mn in Q1 2020. This is likely to be exasperated by increased preliminary costs as a result of setting up sites to meet COVID-19 restrictions, placing further burden on the Bahraini construction industry. 

The government of Bahrain has however introduced a range of measures, including a US$11.4bn stimulus package, will help offset some of the detrimental impacts of the virus.

In Kuwait, a survey by Bensirri public relations revealed that 45% of business owners suspended their activities, with another 26% potentially declaring bankruptcy as a result of COIVID-19 and low oil prices. 

The construction industry in the country is expected to witness an uptick, in line with the country’s Vision 2035.  A range of transport and healthcare related infrastructure, commercial buildings, industry facilities, water distillation facilities and renewable energy projects should bolster the construction industry.

“On a positive note, pandemic-related restrictions have served as a catalyst for further advancements in the technology sector. The data centre market in the GCC, in particular, has remained relatively resilient as the shift towards virtual working platforms and online shopping is compounded by longer-term trends, such as investments in 5G technology, this is creating demand in the technology market segment,” he concluded.

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