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The GCC project markets has recorded its worst start to a year for over a decade in 2017, with contract awards plunging by over 50 percent year-on-year (YoY) in the first two months, according to a new whitepaper by MEED Projects.
The value of new work awarded in January and February came to about $11.3 billion, down 50 percent from $23.7 billion worth of deals awarded in the same period in 2016.
“Last year was a record bad year for the GCC projects market, with $116.3 billion of awards in total,” the report said, adding that contracts completed in 2016 were valued at $166 billion, leading to a $49.7 billion shortfall.
The Gulf market’s six-month rolling average is also declining, falling to $6.5 billion of awards in February – its lowest level since the end of 2005.
The six-month rolling average has been on a downward trajectory since May 2014, and is set to fall further in the first half of 2017, given the lower value of deals awarded in January and February.
Despite the fall in contract awards, the region’s construction sector has seen an upswing in sentiment following a poor start to the year.
The MEED Construction Market Index (CMI) rebounded in February to a score of 54.49, indicating improved sentiment among business leaders, despite ongoing cash flow concerns.
“The improvement in sentiment could be explained by the growing feeling that the market has reached bottom and a recovery will start towards the end of this year,” MEED said.
However, contractors are not anticipating a major upturn until late 2018 or 2019 except in Dubai and Qatar, which are continuing to award contracts for Expo 2020 and the 2022 FIFA World Cup, respectively.
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