Published: Sep 22, 2014
Source: Peninsula Qatar

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Infrastructure projects to hit $26.2bn

The value of new infrastructure projects awarded in Qatar is expected to hit $26.2bn by the end of 2014. The value of new projects across the GCC is expected to surge 77.8 percent year-on-year to $86bn.

Citing data released by leading Mena construction project tracker Ventures ONSITE, Global Investment House (GIH) noted in its second quarter of 2014 GCC Construction Contractors report that value of new projects in the UAE would rise significantly to $15.8bn in 2014 from less than $3bn in 2013. Small contributors in 2013, such as Kuwait and Bahrain, are expected to witness ten-fold and eight-fold jump in total value of projects to $3.5bn and $3.4bn, respectively, in 2014.

Value of new projects undertaken in Oman is projected to increase 35 percent year-on-year to $7.4bn in 2014. However, the total value of new projects in Saudi Arabia declined 13 percent YoY to $29.3bn from that in 2013.

The GIH note said profits of GCC contractors dropped 17.7 percent YoY to $42m in Q2, 14 from $51m in Q2, 13, the first decline in five quarters. Total value of projects awarded fell to $1.6bn in Q2, 14 from $2.9bn in Q2, 13, mainly due to a decline in the order receipt of UAE-based companies.

The GCC construction market is valued at $2.5 trillion, including planned and ongoing projects, according to MEED. Qatar has projects worth $270.1bn, accounting for 11.2 percent of the total construction market. Saudi Arabia continues to enjoy the highest market share of 44.3 percent, with projects valued at $1.1 trillion. The UAE holds the second-highest share at 30.3 percent, with project value totalling $717.7bn.

Order backlog surged 10.8 percent YoY to $13.5bn in the region in Q2, 14, after rising 23.2 percent in Q1, 14. Total value of projects awarded was $1.6bn, down 44 percent YoY from $2.9bn in Q2, 13. On a quarter-on- quarter basis, projects awarded decreased marginally by 2.9 percent. The UAE-based companies dragged the sector’s total project awards.

The region’s construction sector’s gross margin stood at 11.3 percent in Q2, 14, marginally up from 11.2 percent in Q2, 13. However, on a QoQ basis, gross margin contracted from 11.6 percent in Q1, 14. Operating margin contracted to 4 percent in Q2, 14 from 5.4 percent in Q2, 13.

GCC’s construction industry continued to expand in Q2, 14, which is clearly reflected in the 10.8 percent YoY growth in order backlog. However, the sector’s profits, after growing for four consecutive quarters declined 17.7 percent YoY to $42m in Q2, 14. 

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