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Market Background

Middle East provides shining light for global construction outlook

The Middle East provides a key shining light where the Region’s construction market recovery is well underway, with capital raised in the first half of 2012 increasing by about 200% compared to the same period in 2011. Despite the recent downturn in the region due to the wave of political uprisings known as the Arab Spring swept across the Middle East and North Africa (MENA) region, the fundamentals for the construction market remain strong, and analysts are confident that fenestration demand will rebound in the medium - long term; The supply-demand imbalance between finished products output and apparent consumption in the Middle East & North Africa (MENA) region is expected to widen in the next few years.

 

Following the Egyptian Revolution in February 2011, construction activity resumed relatively quickly after delaying period. As a result, and factoring in a strong performance in the second half of 2012 year, we remain relatively bullish on the country's construction industry value for FY2010/11 and anticipate 3.3% year-on-year (y-o-y) growth to reach a value of EGP56bn. Over the longer term the experts confirmed that there is potential for Egypt to return to a higher growth trajectory, although this will remain below the previous double-digit rates for few time. The temporary postponement of investment and consumption decisions will start to be implementing as the Arab Spring offers great opportunities in countries such as Egypt, Tunisia, Morocco, and Jordan, which have begun to undertake significant political reforms which affects on the economic performance.

 
  • In Saudi Arabia, the Government’s vast SAR500billion investment in infrastructure and affordable housing continues to spur growth, while the ease of access to credit from the Kingdom’s well-capitalized banks is driving private sector fixed-asset investment. Saudi Arabia’s growing need for sustainable energy, has led to The Kingdom’s first tender for a nuclear plant by the end of 2012. In addition, the country has plans to build 16 nuclear reactors by 2030, helping to meet the domestic demand for electricity.

  • Top 10 new malls under construction in the Middle East. Major retail complexes in countries including the UAE, Qatar, Egypt and Lebanon are among new shopping malls set to open in the Middle East over the next three years.

  • Forecasting figures predict a total of $4.3trn will be invested in construction projects across the MENA region by 2020, representing an increase of almost 80% from today's spend.

  • A revival of the construction projects market is expected in the UAE, with some $75bn worth of construction projects planned between now and 2016.

  • Qatar, boosted by its ongoing plans for the 2022 world cup, continues its ambitious infrastructure development programme with an estimated total of $600bn being invested on developing infrastructure over the next decade.

  • A burgeoning real estate and transport infrastructure development agenda is underway in Iraq, with spending rising to $35bn in 2012.

  • Egypt has a large and growing population; currently at 82.5 million people and growing at an annual rate of 1.9%. As a result, many foreign retail companies are viewing Egypt as a market with growth opportunities for construction. Currently, over 60.0% of the population in Egypt is under the age of 30. Therefore, the demand for affordable housing is set to show strong growth for construction. In line with the Government's Vision for 2030, government plans to increase the number of new cities in desert areas from 17 to 59 cities by the end of 2017.

  • According to property experts, Egypt is among the top three locations in the Middle East and North Africa region for investment from foreign real estate investors

  • Dubai’s successful bid for the World Expo 2020 – Construction sector will benefit immensely from the win as many projects that have been announced and are taking shape will have to be completed before the city gets ready to host the event.