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Record $172 billion in contracts predicted across GCC countries in 2015

Contracts awarded for projects across the Gulf Cooperation Council (GCC) region are predicted to be worth $172 billion in 2015, the highest on record, according to a Deloitte report (92-page / 9.52MB PDF)03 Jun 2015

The GCC comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

"From road to rail, hotels to hospitality, engineering to Expos, most sectors and service providers are under increasing strain to meet demand," said Andrew Jeffrey, director of Deloitte's Middle East capital markets advisory service, in his introduction to the report.

"Liquidity, absent from the market just three years ago, is flowing again with bankers and investors keen to be involved in the resurgence of ambition and opportunity," Jeffrey said.

“The forecast of $172bn worth of projects is against a backdrop of lower oil prices, continuing political unrest and reduced International Monetary Fund (IMF) growth forecasts across the GCC,” said Cynthia Corby, Deloitte's construction industry leader for the Middle East.

“However the GCC countries have the benefit of reserves, which they have built up as a buffer and which they can continue to use to achieve their outlined strategies. Therefore, they are expected to continue to spend on infrastructure and capital projects in order to achieve their strategies for diversification of their economies.” she added.

"The continuing low price of oil … is the grey cloud threating to put the brakes on growth, and on governments and private sector spending as revenues continue to be squeezed. What seems clear is that the necessity to move away from oil-based economies has never been greater, and that in the race to diversify, there will be winners and runners-up," said Jeffrey.

“Quite how this will play out is too early to say, but the gap is likely to grow, providing a regional hotspot of investment and development,” he concluded.

The largest project in the UAE is the Al Maktoum airport expansion, which is expected to be the biggest airport in the world when it is complete and to cost $32bn. It is followed by the $20bn Al-Gharbia Chemicals Industrial City in Abu Dhabi.

In Saudi Arabia, the Al Mozaini - Riyadh East Sub Centre, an administrative hub, is budgeted to cost $15bn. The second largest planned project is the Khozam urban regeneration project  in Jeddah for $13.3bn.

Both of the two largest projects in a 'pre-execution' stage in Qatar are from QRail – phases one and two of a passenger and freight rail development, budgeted at $15bn and $3bn.