Major boom in Gulf infrastructure projects

The report explains that the construction boom in Gulf is drawing into the region, the biggest construction companies of the world, while a slow down in construction activities is being witnessed in established markets of North America and Europe.

Middle East is becoming the prime target for more numbers of international contractors. The construction boom is expected to continue with $884 billion worth realty projects in Gulf that are in various stages of development.

However, this construction boom, on the other hand, has led to severe shortage of resources. While the clients face shortage of contracting capacity, contractors face difficulty in souring materials and labour. Ultimately, this leads to increase in cost of raw materials, higher wages, and on the whole, high cost of project.

Last year the price of steel increased by 70% and cement prices increased by 50%. This year a 20% increase in wages are expected. Last year, the contract awards touched $193billion, and contractors with strong regional position made huge profits.

The contractors who face cost pressures are now seeking for change in construction procurement practices in the region, with contractors and clients planning to work in collaboration with each other, to reduce project cost and durations. Gulf Contractors are, in fact, seeing their profit margins grow into double figures, states the report.

Posted on 4/2/2008

Recent Articles