Dubai: New contracts issued in the Gulf could close the year at $120 billion, down nearly a third on 2015 and “well below what was initially forecast”, says a new report from Meed Insight.
The slowdown is “set to make 2016 the worst year for project activity since 2004”, and comes as governments have reacted to lower revenues by severely reducing project expenditure.
Based on the current project pipeline, up to $152 billion worth of contracts could be awarded in the GCC next year. A worst-case scenario puts it at $112 billion.
This year, Qatar and Saudi Arabia were the worst hit, posting “less than half the contract awards they awarded last year as project activity levels in the two countries have slowed to a crawl”.
Only Dubai and Bahrain saw construction-related activity being maintained or even increase.
“With more than $18 billion and $6 billion worth of contract awards in 2016 to date, respectively, Dubai and Bahrain have been able to prosper this year because they are not as dependent on the oil price,” said Ed James, Meed’s projects director of Content and Analysis. “Key project clients such as Emaar and Nakheel have developed their own income streams independent of government expenditure and have therefore not been as impacted by reductions in state spending, while Bahrain has been boosted by financial assistance from its neighbours.”
