The Deloitte Middle East Powers of Construction report published today forecasts that the value of new contract awards in the GCC will fall by 17 per cent to $170bn in 2017 due to the public spending squeeze in the region.
Project awards in Saudi Arabia are forecast to fall by $10bn to US$40 billion. The forecast of contract awards in the UAE is set to be stable and mainly driven by the robust construction market in Dubai.
There is a substantial amount of projects to deliver in Qatar such as stadiums, hotels, rail and roads in order to enable the World Cup and the forecasted value of contract awards stands at $22 billon.
Oman is expected to remain stable with values around $13 billion, and Kuwait has a strong amount of planned activity for this year in the construction and transport sectors.
Deloitte Middle East infrastructure and capital projects leader Cynthia Corby said the new economic reality of lower oil prices will constrain the amount of funding available to GCC governments to finance capital and infrastructure projects and they will have to make tough choices about spending and reform.
“Spending in the region will need to be better prioritised in order to ensure it meets social and economic development,” Corby said. Governments will have to seek for the private sector involvement, innovate and find alternative funding sources to fund their project requirements.”