Construction spending in the GCC countries is the single largest sector of this region. Over the years, construction spending in the six GCC countries has increased considerably and TechNavio studies indicate that it is expected to reach US$446.01 billion in coming years.
A unified approach of contractors, in sync with the Construction industry, further aids the market for construction spending. Thus, considering its market stability, it is expected that the industry will grow at a CAGR of 37.73 percent.
Of all the countries in the GCC region, UAE in particular, has been known for its spectacular infrastructure achievements. Its government strongly promotes investment in the region for the development, renovation, and expansion of the Infrastructure sector. Burj Khalifa, situated in Abu Dhabi, is one such masterpiece constructed in the country. It is said to be the tallest man-made structure to date.
Following suit, construction spending in other GCC countries too, is inclined towards an upwards trajectory. Particular interest is being envisaged by local governments to rejuvenate sectors like Housing, Education, and Healthcare. Examples of major construction projects such as Etihad Rail and infrastructure for the FIFA World Cup 2022, will soon be completed while many such new projects are in the pipeline.
Also, the point to be noted is the fact that, despite a sluggish performance by the Global Construction industry in 2013, growth prospects of the GCC Construction industry seems to be positive.
Studying these bullish trends in construction, TechNavio analysts bring you 3 key market drivers that are driving The Construction Spending Market in GCC.
Rapid Population Growth
Rapid population growth is one of the major factors contributing to the growth of the Construction Spending market in GCC countries. Populations in GCC countries are rapidly increasing and are expected to reach a total of 54 million by 2020. As a result, demand for residential development is also increasing substantially.
As well as residential development, countries in GCC also need to provide efficient public infrastructure for the growing population, hence the trend of increasing construction spending. Construction of large-scale infrastructure development projects such as airports, railways, highways, and mass transit systems is also expected to increase owing to the growth of its population.
Growth of Tourism Industry
Another major driver contributing to the growth of the market is the expansion of the Tourism industry. The number of tourists visiting the GCC countries is gradually increasing. In 2013, more than a million tourists were reported to have visited the GCC countries. This figure is expected to increase significantly. Therefore, to accommodate the large number of tourists and further promote the Tourism industry, GCC countries are investing heavily in the development of airports, transportation systems, efficient rail and road networks, and hotels.
Upcoming Mega Events
Upcoming mega events hosted by the GCC such as Dubai World Expo 2020 and the FIFA World Cup 2022 are contributing enormously to the growth of this market. These events have led to a surge of infrastructure development in the region. The government of Dubai has invested US$7.8 billion for the expansion and upgrade of the DIA (Dubai international Airport).
Qatar is set to host the FIFA World Cup in 2022. The government of Qatar is expected to spend billions of dollars for development of infrastructure related to the mega tournament, which includes construction of world-class stadiums in the cities of Doha, Al Rayyan, Al Wakrah, Al Khor, and Lusial.
Mega events are thus driving the growth the agenda of growth in Infrastructure, Residential, and Non-residential sectors. This is contributing to the overall growth of construction spending in the market.
