Defying global economic challenges, the Middle East and North Africa (Mena) region’s construction sector continues to demonstrate strong performance with a total of $101 billion worth of projects awarded in the first half of the year, a new report revealed.
In addition, the combined estimated value of the project pipeline in the region exceeded $3 trillion with Egypt, Saudi Arabia, and the UAE collectively owning over 60 per cent of it, said JLL’s latest Construction Market Intelligence report, which is based on insights gathered from industry sources and experts. Saudi Arabia has the largest project pipeline with a 35 per cent share, translating to an anticipated value of $1.3 trillion, while Egypt and the UAE have an estimated value of $500 billion each.
In terms of contract awards in the first half, the largest share of the project value, approximately 67 per cent, came from Saudi Arabia ($44 billion) and the UAE ($23 billion) with both markets recording an increase compared to the same period last year, said JLL’s latest Construction Market Intelligence report, which is based on insights gathered from industry sources and experts.
Although Egypt experienced a decline in the value of awarded projects in the first half of this year as compared to the same period last year, the country has a robust pipeline of upcoming projects.
In the UAE, the residential sector stood out as the strongest with over $9 billion worth of awarded projects and Dubai alone accounting for approximately 75 per cent of the total value. In addition, Saudi Arabia and Egypt awarded projects worth $5 billion and $771 million respectively in the sector. Besides residential, the hospitality and mixed-use segments also emerged as prominent sectors, with Saudi Arabia’s leisure projects contributing $2 billion.
Laura Morgan, Market Intelligence Lead MEA at JLL, said: “While global interest rate hikes, high levels of inflation and a sluggish trade recovery continued to impact the construction industry globally, the region stood out as an anomaly showcasing a sustained growth trajectory. With an project pipeline surpassing $3 trillion, the construction sector promises more than just stability in the forthcoming period. It is slated to exhibit enduring growth, remaining the cornerstone of economic growth and diversification in the region.”
Regarding tender price inflation, an average annual percentage change of three and six per cent is estimated in the UAE and the kingdom respectively in 2023.