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Construction contracts swell 25% to $41bn this year in Saudi Arabia, Qatar and the UAE

Egyptian investments are running at their lowest level in two decades in the aftermath of the revolution last year. But MEED contract award data shows Saudi Arabia, Qatar and the UAE have witnessed a big upturn in construction and infrastructure contract awards so far in 2012 which are up 25 per cent to a total of $41 billion.

The latest BofA Merrill Lynch Global Research report says: ‘In the UAE, the past four months saw large contracts being awarded in the oil and gas and petrochemical sectors worth $9 billion while construction and infrastructure awards increased by $3 billion over the same period… growing 32 per cent year-on-year to stand at $7.9 billion while total awards grew by a whopping 85 per cent to $17.4 billion in the year-to-September.

Qatar flat

‘After a strong start to the year in Qatar… construction awards remained flattish over the summer lull. That being said, total awards still grew by 61 per cent in the year-to-September on the back of large recent contracts awarded ($6.4billion in the past month) in the petrochemical industry’.’

Saudi Arabia presented a more mixed picture ‘with total awards (excluding defense contracts) down 22 per cent year-on-year in Saudi Arabia… mostly due to a large drop in oil and gas project awards (down 84 per cent year-on-year to $800 million) – in the meantime, construction and infrastructure awards increased by 21 per cent to $6.3 billion despite a soft patch over the summer months.’

Big project pipeline

MEED contract awards data indicates a potential pipeline of $374 billion of projects to be awarded from Q3 to the end of 2013 in the UAE, Qatar, Egypt and Saudi Arabia, of which more than half will be in the kingdom.

Clearly the message coming through here is that the UAE recovery has now reached the construction sector. Anybody touring the country and looking at the work that has restarted on many projects can see this for themselves. Saudi Arabia is also very lively on the construction side though Qatar has slowed down with worries about local cash-flow now an issue.

Given the UAE’s dependence on Saudi Arabia for re-exports this bodes well for the continued economic recovery in the emirates. As the ArabianMoney investment newsletter highlights this month the continuation of the depression in UAE share prices also looks an anomaly though one that shows no sign of an imminent upturn (subscribe here).

arabianmoney, 04 November 2012

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