Special Features
Value Of Completed GCC Construction Projects Up 48 Per Cent To US$68.7bn In 2012
Building projects worth over US$68.7bn were completed in the GCC in 2012 according to an in-depth sector report issued today. Despite being lower than previously estimated, the Gulf’s construction industry grew by 48 per cent over 2011 when completed projects were valued at US$46.5bn. The report - commissioned by dmg :: events, the organising team behind INDEX, the region’s largest and longest established interiors and design exhibition, and conducted by Ventures ME - also forecasts a further 19 per cent sector growth in 2013, with completed construction projects set to reach US$81.6bn.The value of new construction projects in the GCC is also expected to rise in 2013, with projects valued at US$64.5bn set to be awarded to contractors over the coming 12 months. This figure shows a sharp increase, up by a third (33 per cent) on the value of projects awarded in 2012 (US$48.4bn).
Growth of construction projects by sector
In 2012, residential, commercial and hospitality sectors led the GCC projects market; with US$29.4bn, US$12.2bn and US$5.5bn worth of projects completed respectively. Education, medical and retail sectors were other significant contributors, with completed projects worth US$5.2bn, U$3.3bn and US$2.4bn respectively.
In 2013, a two-paced growth is likely with residential, retail and commercial sector construction projects growing at slower rates of 4.4 per cent, 4 per cent and 13 per cent to US$30.7bn, US$2.5bn and US$13.8bn respectively. However, hospitality, educational and medical projects will grow at faster rates of 27 per cent, 69 per cent and 79 per cent respectively to US$27bn, US$8.8bn and US$5.9bn. The hospitality and educational sectors of the GCC building construction industry will see their market share by value of projects completed in 2013 grow tremendously by 137 per cent (from 3.8 per cent to 9 per cent) and 134 per cent (4.7 per cent to 11 per cent) respectively. Residential building projects will remain the largest segment of the real estate market in terms of projects expected to complete in 2013 with a market share of 38 per cent. Commercial will remain the second largest real estate sector with 17 per cent but educational is set to overtake the hospitality construction segment and claim third place with an 11 per cent of the market share against hospitality’s market share of 9 per cent.
Frederique Maurell, Event Director for both the INDEX and Office exhibitions, who supervised the compilation of the report, said: “A number of construction projects that had been on hold resumed in 2012, as the region’s oversupply concerns were dispelled by a rise in demand due to growth of the population and disposable incomes. Governments have initiated construction across key sectors to cater to this demand. Though recovery of the commercial real estate sector remains somewhat subdued, new opportunities are emerging in residential, hospitality, retail and education sectors; albeit at a cautious and regulated pace. While the global economy as a whole remains relatively flat, it is safe to say that GCC construction industry and the associated interiors fit-out sector are recovering momentum.”
Overview of the GCC interiors and fit-out market
Despite being lower than previously forecast, the value of the GCC interior contracting and fit-out market in 2012 was US$7.86bn – an increase of 56 per cent against the 2011 figure of US$5.04bn and is expected to rise by 17 per cent in 2013 to US$9.2bn. In 2012, the UAE was once again the largest interiors and fit-out market in the GCC and, at US$2.83bn, made up 36 per cent of the US$7.86bn GCC market. It was followed by the Saudi Arabia and Qatar which were valued at US$2.6bn and US$1.49bn respectively. The Kuwait interiors and fit-out market was valued at US$472m, Oman’s at US$314m and Bahrain’s at US$157m.
The residential sector continues to command the largest market share of the GCC interior contracting and fit-out market with a 41 per cent share of the overall market value in 2012 (US$3.24bn). Whilst the residential sector is expected to remain the largest sector of the interior contracting and fit-out market in 2013 and increase in value by 5 per cent, it will see its market share reduce slightly to 37 per cent (US$3.4bn) as other sectors grow at a faster rate.
As GCC countries continue to invest in social infrastructure, the value of the educational and medical sectors of the interior contracting and fit-out market will see huge increases of 70 per cent (from US$412m to US$702m) and 80 per cent respectively (from US$261m to US$470m).
In 2013, the hospitality sector of the GCC interior contracting and fit-out market is set to overtake the commercial sector and take the second largest share of the market - increasing in value by 31 per cent from US$1.2bn to US$1.57bn. “The interiors and fit-out market is seeing a marked evolution, with owners refurbishing existing properties, managing space better and enhancing their environments’ sustainability. This trend is being driven by investors acquiring partly completed properties and renovating, expanding or adding value rather than initiating new developments. The interiors and fit-out sector is responding well to these changes in demand, and beginning to see growth in new projects. Together, this puts the market firmly on an upward trajectory,” added Maurell.
The 23rd edition of the annual INDEX Interiors and Design Exhibition, the region’s largest and longest running interiors and design exhibition, will run alongside the 12th edition of the annual Office Exhibition on May 20-23, 2013 at the Dubai World Trade Centre, UAE.
