Demand within the global construction equipment manufacturing industry is anything but homogenous, with certain countries and sales regions significantly outperforming others, with a whole host of factors fuelling and suppressing each key market - Guy Woodford reports
When 18th century Irish essayist, novelist and satirist Jonathan Swift gave the world his famous quote “There is nothing in this world constant, but inconsistency”, he wouldn’t have known at the time how well it sums up the state of the current global construction equipment market.
Of the key regional sales markets, Europe is showing steady signs of growth, with the UK, in particular, enjoying strong sales numbers.
It’s a somewhat different tale being told in the US. With exports down, American hopes are being increasingly pinned on rising domestic plant demand.
Contrasting the US, China, the nation with the world’s biggest demand for construction equipment, has seen domestic sales dip, with many firms now looking to up their percentage of exports against total machine sales.
However, the Asia-Pacific region, with China at the forefront, is still the key region for aggregate demand due to its huge government-led investment in new transport and other vital infrastructure. In fact, leading independent research tips the region’s share of overall global aggregates demand to grow over the next two years. Such a big demand for aggregates tends to go hand in hand with big demand for construction equipment.
The latest construction equipment unit sales forecast from
Along with Asia-Pacific, respected industry analysts such as OHR, along with national construction-minded associations, are tipping markets such as Africa and parts of South America, especially Brazil, to continue to prosper as governments and private investors continue to invest big money on new public infrastructure works.
Europe
According to Sebastian Popp, the
“In 2014, it was well illustrated that cycles in the construction equipment industry have become faster and less predictable: an extraordinarily strong start to the year was followed by an extended summer slump that dragged down the numbers, which again was followed by a third quarter seeming to have brought back an upswing. At the moment [Dec 2014], incoming orders are close to the levels one year ago. This suggests a stabilisation of the industry rather than a reversal of the trend, although the upswing still seems rather fragile.”
Despite something of a rollercoaster ride in European demand during 2014, Popp is confident that the continent’s construction equipment market will see substantial growth over the full year. “At the moment a majority of manufacturers are expecting a sales growth of at least ten percent this year, and this might be close to what the industry will finally deliver.
“A realistic forecast for 2015 is hardly possible. The extended Russia-Ukraine conflict, crises in Syria and Iraq, the Ebola challenge, and the still unsolved Euro crisis create a lot of uncertainty. The most decisive factor for the near future will probably be how the customer industries will deal with this. If they postpone investments that are not absolutely essential, the market could end up at a level below the inherent demand. But, with North America, the Middle East and maybe also the former growth engines in Far East Asia expecting a rather positive development, the basic conditions are not too bad. Also, Northern and Western Europe are on a good way with the exception of France where growth seems to have come to an end.”
In terms of product groups, Popp says earthmoving equipment manufacturers are the most optimistic, whereas the road equipment industry increasingly expects a dip in sales. “This does not come as a surprise since they had been the best performer up to now,” Popp adds.
OHR offers further encouragement on European market demand. After 111,655 unit sales in 2013, the consultancy is forecasting a 7% year-on-year rise in sales to 119,070 units in 2014. OHR forecasts a further 4% year-on-year rise in 2015 to 124,098 units.
The OHR’s 7% forecast sales growth is expected to be shared across all major product types. Only backhoe loaders and skid-steer loaders are anticipated to see a decline in sales in 2014 compared to the previous year. In volume terms, the OHR states that the 9% forecast growth in mini excavators and the 13% tipped growth in crawler excavators equates to increases in unit sales of 3,344 and 2,589 respectively.
In 2014, the UK is tipped by OHR to succeed Germany as the highest European construction equipment sales nation, achieving a 20% year-on-year rise from 25,297 to 30,445 units.
Germany is expected to record the second highest number of 2014 unit sales at 29,992 units sold – up 4% on 2013. Sales in France, the third highest sales nation, are forecast to rise by 1% in 2014 to 23,470 units compared to 23,134 units in 2013.
The nation with the biggest year-on-year percentage sales rise is predicted by OHR to be The Netherlands (+23% to 4,206 units), with the biggest sales drop nation tipped to be Switzerland (-14% to 3,377 units).
United States
The
Africa was the only world area in the US exports plus column, with an encouraging 4.3% increase. Australia/Oceania recorded the steepest decline, at 38.6%, followed by South America with a 33.1% drop. At mid-year 2014, exports of construction machinery to Europe declined 25.4% compared to H1 2013, for a total value of $1.02 billion, and exports to Canada dropped 4.6% to total $3.51 billion.
Exports to Asia declined 13.9% to $1.04 billion for the first half of 2014. Mid-year exports to Central America decreased 23.7% to $949.3 million, and exports to South America declined 33.1% to $1.28 billion. Australia/Oceania’s construction equipment export purchases decreased 38.6% for a total $460.7 million, while Africa took delivery of $682.1 million worth of construction equipment, a gain of 4.3%.
The top countries buying the most US-made construction machinery during the first half of 2014 were: (1) Canada - $3.51 billion, down 4.6%; (2) Mexico - $770.4 million, down 24.6%; (3) Australia - $424.7 million, down 40.6%; (4) South Africa - $400.5 million, down 26.7%; (5) Brazil - $358.3 million, down 30.1%; (6) Chile - $299.8 million, down 37%; (7) Peru - $279.4 million, down 15.1%; (8) Belgium - $210.4 million, down 36.3%; (9) Saudi Arabia - $206.2 million, down 43.1%; (10) China - $189.8 million, down 21.8%; (11) Russia - $172.1 million, down 36%.
In its May 2014 report on the US construction industry, Timetric, the independent business research analysts, quoted American Society of Civil Engineers (ASCE) research claiming that one out of nine US road bridges is deficient, 42% of major urban highways are congested and 32% of major roads are in poor condition. In a bid to upgrade the country’s road transport, the Government’s 2013 budget included a Surface Transportation Reauthorization Bill, worth US$476 billion for a period of six years, which is financing all highway, bridges and mass transit construction projects until 2018. Furthermore, during the six-year period, the bill also includes the investment of US$305 billion for the reconstruction of roads, bridges and an upgrade of the highway system, indicating an increase of 34% compared to the previous bill.
The Timetric report is supported by a November 2014 report by Euromonitor International (EI), the independent business intelligence research firm. Led by a spur in residential construction, the US construction market is said by EI to be finally showing stronger signs of recovery and recorded its first year of positive growth in 2013. As consumer confidence improves and unemployment is declining, new homes are being constructed. In 2013 permit-issuing authorisation increased by 19%, which translated in a spur in residential construction. EI says the outlook for the construction industry coupled with positive mortgage industry measures remains positive due to the revival in residential as well as non-residential construction, especially by the energy sector. All these positive signs are likely to create concurrent strong demand for construction equipment in one of the world’s biggest single nation markets.
South and Central America
The
Brazil has the largest construction equipment market in its [South America] region. But it’s a market facing an intriguing future post 2017, after the huge public investment in infrastructure surrounding the 2014
The Brazilian construction industry registered a CAGR of 12.31% 2009-2013, according to Timetric. As well as the big public and private investment in infrastructure, along with residential and commercial construction projects, during this period, the government’s Growth Acceleration Plan (Programa de Aceleração do Crescimento – PAC) also supported the growth, reports Timetric. The industry research firm believes growth in the construction sector is likely to continue 2014-2018, fuelled, partly, by the continuing recovery of the global economy. Timetric is forecasting a CAGR of 9.6% over this period.
Euromonitor International says Brazil’s construction market saw 13% CAGR 2007-2012, in line with a booming national economy and growing mid-income group. Local providers enjoyed 13% annual revenue growth in the review period thanks to government infrastructure programmes. High profit margin, at 28% of turnover in 2012, is said by EI to be encouraging new companies to enter the industry.
Since late 2013, construction activity is said by Timetric to have been fairly weak in Argentina, contracting by 2.1% and 9.9% in real terms in Q1 2014 compared with Q1 2013 and Q4 2013 respectively.
Among the country’s major ongoing transport infrastructure projects, and a key driver of infrastructure construction growth 2014-2018, is the Norte Grande III Infrastructure Program. The project to enhance, improve and rehabilitate road corridors in the Norte Grande region is being funded by a US$300 million 25-year tenure loan to Argentina from the Inter-American Development Bank (IDB).
While Timetric says that Argentina’s construction industry is set to post a CAGR of 22.53% 2014-2018, high inflation will result in the industry’s output growth rate in real terms being lower over that period.
In Mexico, government initiatives to enhance transport infrastructure and high value-add industries, coupled with population expansion and an expected rise in consumer confidence will, tips Timetric, lead to a construction industry CAGR rise of 4.84% 2014-2018. This is up slightly on the 4.64% CAGR of 2009-2013.
Colombia is set for big investment in road infrastructure construction projects to 2020 after the decision by four of the country’s pension funds in March 2014 to invest $12.7 billion in them. Timetric says that private investment in infrastructure has been encouraged since December 2011, when the country’s parliament approved a Public Private Partnership (PPP) law providing private investors with better guarantees and a better institutional and legal framework to help improve cooperation between the private sector and government. The PPP law is expected to accelerate the country’s infrastructure construction.
The growth of Chile’s construction industry is set to remain strong over the period 2014-2018 as the government ups its efforts to improve the nation’s infrastructure. Timetric has tipped Chile’s construction industry output is expected to record CAGR of 8.9% 2014-2018.
Construction equipment manufacturers are sure to have noted the Chilean government’s passing in 2012 of a new research and development (R&D) law to stimulate R&D investments and establish Chile as a primary innovation hub in Latin America. Under the law, the corporate taxpayer can claim a tax credit of 35% on all R&D projects, with the remaining 65% being tax-deductible in any sector. The business friendly law also tripled the maximum amount of tax credit that companies can claim to $1.2 million a year.
China
Although China sales of construction equipment are tipped by OHR to fall by 13% in 2014 to 261,750 units, compared to 301,360 units in 2013, this still compares favourably to what was a 34% year-on-year sales dip 2011-2012. What’s more, OHR predicts a 5% rise 2014-2015 to 274,615 units.
After a 2% fall in unit sales in 2016, OHR forecasts that sales will increase by 4% 2016-2017, and by a further 3% to 288,160 unit sales 2017-2018.
By product, wheeled loaders are set to remain biggest selling equipment line 2014-2018, although predicted sales of 116,000 in 2018 will be down 19.4% on 144,000 sales in 2014 and 3.3% on 120,000 OHR predicted sales in 2014.
The forecasted 13% decline in China construction equipment market sales in 2014 is largely, reports OHR, due to weak demand in the excavators and wheeled loaders sectors, which between them account for 85% of total sales. If this decline materialises, demand in 2014 will equate to a 46% drop from peak sales levels in 2011.
While sales in Q1 2014 were positive, Q2 2014 sales were once again depressed, with OHR noting: “The market trend went against the expectations of many manufacturers, whose main priority is now collecting outstanding payments on past machine sales. The level of bad debts is an increasingly worrying feature of the industry, and is something that needs to be addressed as a matter of urgency.”
OHR’s latest research also comments on another notable current trend in the China market: “To increase their competitiveness, there are now signs that some companies are offering discounts on certain machines, which is resulting in some interesting changes in market structure but is doing little to stimulate overall demand.”
Timetric reports that in a bid to boost trade competitiveness and cope with the rising urban population, the Chinese government is focusing more on infrastructure development. One of the most ambitious proposed projects involving China is the 13,000km China-Russia-Canada-America rail line. The vast line will start from the Northeast of China passing through Russia underneath the Pacific Ocean, and finally connecting the continental US via Alaska and Canada. Timetric notes that the estimated budget and time taken for the construction of the high speed rail network to the US have not been revealed, and there is said to still be some scepticism over the delivery of this project.
An expanding economy, coupled with increased government spending on infrastructure, is forecasted by Timetric to lead to CAGR in the Chinese construction industry of 9.72% over the period 2014-2018.
In the five years to 2017, the Freedonia Group says that production of construction machinery in China is expected to continue to grow rapidly, surpassing the United States to become the largest equipment supplier globally.
Su Zimeng, Vice-Chairman and Secretary General of the China Construction Machinery Association, believes that based on the development of the Chinese construction machinery industry in recent years and the nation’s macro-economy, construction machinery industry revenue in 2015 will increase by about 7% on the forecasted full year 2014 revenue. Speaking at a pre
Japan
Japan’s construction equipment market is fighting back after it, along with all other commerce in the country, was hit by the aftermath of an earthquake, subsequent tsunami and nuclear disaster in 2011. Timetric notes that in a bid to reconstruct and revitalise the economy, the Japanese government introduced economic reforms, such as increased subsidies and tax breaks for companies investing in factories. This has led, says Timetric, to a favourable outlook for the construction sector. Quoting Japan Ministry of Economy, Trade and Industry (MEIT) figures, Timetric reports that indices of national construction activity rose from 87.5 in Q4 2012 to 99.4 in Q4 2013, registering growth of 13.6%. For the period 2013-2018, Timetric forecasts a 3.19% increase in Japan’s CAGR.
OHR reports that the value of Japan’s construction equipment sales was around $5.7 billion in 2013, but is likely to fall to around $4 billion in the next five years.
Due to increased investment in construction investment by Shinzō Abe’s Japanese government, mirrored by a rise in committed private-sector capital, the
Japan CEMA says that North America, Europe, and Asia, excluding China, have been strong export destinations for Japanese OEM’s, with sales growth of 10% in 2014 compared to the previous year.
Rest of Asia
The Indonesian construction industry’s healthy annual growth of 7% 2009-2013, is tipped by Timetric to be followed by further CAGR of 15.9% 2014-2018. Fuelling this growth is said to be the government’s focus on infrastructure and industrial construction, and the rollout of the multiyear Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI). The Plan is set to see spending of up to $428 billion during 2011-2025.
In a bid to improve road networks in East Java, Central Java, East Kalimantan and West Kalimantan provinces, the Indonesian government announced its $380.5 million 476km regional road development project in 2011. Timetric reports that the project is co-financed by the Asian Development Bank (ADB) and the Islamic Development Bank (IsDB), with loans of $180 million and $65 million respectively. The Indonesian government is contributing $135.5 million to the project, which is due for completion by 2016.
Significant investments are being made in South Korea’s infrastructure in order to improve its quality, impact and coverage, says Timetric. This includes the government’s 2013 announced plans to invest $108.6 billion on various road, rail and other transport infrastructure works.
Timetric also reports on how the commercial construction market is being supported by a number of hotel and resort development projects. 20th Century Fox, one of America’s six major film studios, is planning to build a $3.5 billion 75-acre theme park in Changwon City, which is expected to be completed in 2018. Furthermore, the French hotel group Accor SA is said to be in the process of constructing a 300-room hotel in Seoul, due for completion in 2016.
Euromonitor International describes the South Korean construction industry as heavily fragmented, with top five players generating less than 11% of revenue. The industry is expected by EI to grow by 22% 2013-2018, receiving significant government attention, with growth opportunities in the residential and infrastructure sectors.
According to the Construction Industry Development Board Malaysia (CIDB Malaysia), the country’s construction industry – galvanised by government and private sector investments in low cost housing and infrastructure schemes, particularly the Economic Transformation Programme (ETP) – posted rapid growth during 2011-2012. During 2011-2013, Malaysia, notes Timetric, secured 195 projects worth $70 billion, with a further $36.6 billion tipped to be secured in 2014. According to CIDB Malaysia, private sector participation in projects will rise from 30% in 2013 to 50% by the end of 2015. This rising trend, says Timetric, will support Malaysian construction industry growth, and construction equipment demand, over the period 2014-2018. The country is forecast by Timetric to achieve 9% CAGR over this period.
The political protests in Bangkok that began at the end of 2013 and continued into Q1 2014 are said by Timetric to have had a negative impact on Thailand’s construction industry. In real value-add terms, the industry contracted by 8.5% annually in Q4 2013, following a decline of 2.2% in the previous quarter. Timetric notes that in Q1 2014, total private investments in construction declined by 7.8% from the same period in 2013, and by 4.6% during the fourth quarter of 2013. Due to political and social turbulence and a worsening business climate, Timetric reports that the construction industry is expected to remain weak in the short term. However, the outlook for 2014-2018 remains far more positive.
Thailand is said by Timetric to be investing heavily in developing rail infrastructure, and has launched several mass transit routes. To become the regional hub of the earmarked ASEAN Economic Council (AEC) in 2015, the government is said to be focusing more on industrial construction. To promote trade and investment, the Industrial Estate Authority of Thailand (IEAT) is planning to develop four industrial parks in the country by 2015.
Vietnam’s stable economic conditions and government investment in industrial and residential construction will continue to see the country’s construction industry thrive, with CAGR of 11.43% in the period 2014-2018 tipped by Timetric. Expansion in the tourism and retail sectors, coupled with investments in infrastructure projects, will, says Timetric, further support construction industry growth.
Africa
The South African construction industry is, reports Timetric, undergoing a period of unfavourable conditions as a result of economic indicators, which continue to disappoint the building industry. There are fewer projects in the construction market with a higher interest rate, diluting the country’s growth of real estate construction schemes. Timetric notes that according to BER, the building confidence index dropped by 11 index points, going from 52 in Q1 2014 to 41 in Q2 2014. This was down to weak demand from the private sector, prolonged strike action in the platinum sector, an increased project postponement rate, increasing interest rates and declining exports.
On a more positive note, the South African government has launched a number of initiatives aimed at improving the nation’s transport infrastructure. Timetric states that the National Transport Master Plan 2050 (Natmap) was approved by the government in 2010, aiming to expand the country’s rail network and ports through an investment of $102.5 million. The government also adopted the National Infrastructure Plan in 2012, which will see $100.7 billion invested 2013-2016 in building and upgrading infrastructure in South Africa. With the Public Transport Strategy (2007-2020), Timetric reports that the government plans to improve the country’s public transport by establishing the integrated rapid public transport network (IRPTN), and developing rail corridors and bus rapid transit systems (BRTs). For the period 2014-2018, Timetric tips South Africa’s construction industry to achieve CAGR of 8.93%.
Construction is one of the most vital industries in Egypt’s economy, states Timetric, contributing 7% to the nation’s GDP. During the political turmoil in the country from 2011-2013, Egypt’s construction industry recorded low growth. While the industry is expected to remain insipid in the short term, Timetric reports that the long term forecast for Egypt’s construction industry is positive – tipping CAGR of 14.5% for the period 2014-2018.
Residential construction is expected to increase 2014-2018, says Timetric, due to a rising population and increased levels of urbanisation. One of the most populous countries in Africa and the Middle East, Timetric quotes figures from the International Monetary Fund (IMF) which shows how the country’s population rose by 10.7%, from 75.2 million people in 2008 to 84.2 million in 2013. The country’s urbanisation rate increased from 42.8% in 2001 to 43.7% in 2012.
Morocco’s residential, infrastructure and commercial construction markets collectively accounted for 84.1% of the construction industry’s value in 2013, according to Timetric. The contribution of these three markets will, naturally, be significant to overall industry growth, with industry output expected to record a Timetric forecast CAGR of 5.06% during 2014-2018.
Healthy growth in Morocco’s infrastructure construction market will be driven, says Timetric, by investments in road, rail, and energy and communications infrastructure. A number of large transport projects to improve and expand the country's road and rail networks are already underway. Morocco’s National Railways Office is currently constructing the Tangier to Casablanca High Speed Rail project, due to be completed in Q1 2016.
According to a June 2014 research report by Construct Africa, Kenya has a “relatively developed building and construction industry with professional engineering, building, and architectural design services available in numbers with healthy competition.” The industry is said by Construct Africa to be currently experiencing high growth following foreign investment interest, specifically from Eastern powers such as China, as well as the rehabilitation and reconstruction of transport infrastructure under the Kenya Urban Transport Infrastructure Programme.
The Construct Africa report adds: "With the influx of international investment, skills and interest, the construction sector has gained the necessary skills to handle projects efficiently and effectively. The lowering of inflation and lending rates has allowed players in the local construction sector to secure financing at lower-than-ever rates, which has allowed companies to take on more ambitious projects in Kenya and the surrounding East African countries.”
Construct Africa’s 2014 research report also quotes a report published by the Kenyan Ministry of Devolution and Planning in April 2014 noting how the country’s construction sector grew by 5.5% in 2013, up from 4.8% in 2012.
Nigeria’s construction industry since 2010 has enjoyed a real growth rate of 13%, reports the country’s National Bureau of Statistics. Government infrastructure spending has been a major driver of this growth as well as private sector investment in both residential and non-residential construction activities. Another recent Construct Africa research report values Nigeria’s current Building and Construction sector at $12.5 billion, making it a key industry within the country.
India
According to the ICEMA (Indian Construction Equipment Manufacturers’ Association), India’s Earthmoving and Construction Equipment (ECE) market is expected to grow by a healthy 20-25% over the next few years to reach 330,000 to 450,000 units sold in 2020, from current levels of about 76,000 units. This would imply a US$16 billion-$21 billion market, up from today’s $3 billion.
An ICEMA spokesperson says: “The sector will continue to be dominated by backhoe loaders (more than 40% of total demand), but broad-based growth is expected across products, with each segment expected to see double digit growth. A rise in the use of concrete will also create demand for concrete equipment in infrastructure and housing projects.”
The ICEMA believes there are a number of fundamental drivers that will propel the ECE industry forward. Firstly, it believes demand for ECE will continue to rise as a result of growth in traditional end-user industries, including construction and mining.
Such an increased use of ECE in previously traditional applications to speed up projects will, says the ICEMA, give rise to new demand in applications such as digging and soil loading, especially in time-sensitive projects. ICEMA believes demand for ECE is also expected to grow in new segments such as agriculture, which have not historically been ECE users because of a lack of access but are slowly adopting the equipment.
Urbanisation will drive the demand for construction to meet residential, commercial, and infrastructure development needs, according to ICEMA. New players entering the market have made competition stiffer, thereby making ECE more affordable. ICEMA thinks this will further deepen the markets to cover users with ECE needs and previously low access. Finally, more financing of ECE and the increased use of rentals will, says ICEMA, create wider use by encouraging users that don’t necessarily want to own equipment. The rental market is especially expected to pick up in tier 2 and tier 3 towns, where growth will be driven by small contractors doing construction work.
The ICEMA states that a big challenge for India’s ECE industry to overcome is the lack of skilled manpower. “While we continue to put in the market increasing sophisticated machines in increasing numbers the industry will face an increasing shortage of trained manpower to operate and service these machines. Most of the machines operate in remote areas, it is important that the customers have the accessibility to trained people in these areas. While the construction equipment manufacturers do have skill training programs, unfortunately these would not be adequate to meet the expected demand.”
Of OEMs ECE presence in India, the ICEMA spokesperson adds: “Most global OEMs have strengthened their presence in India, attracted by one of the world’s fastest growing construction equipment markets and their need to mitigate cyclicality in developed markets. Nearly all the leading global OEMs have already entered India, while a few more are in the process of entering. All these players can be expected to increase product variety, introduce new applications and services (e.g. Rentals, financing), and hence catalyse growth by increasing supply.”
OHR says that while Indian sales of construction equipment are forecast to fall by 7% in 2014 to 51,955 units, they are tipped to rise by an impressive 24% to 64,443 units in 2015. Looking further ahead, OHR forecast 94,730 unit sales in 2018 – up 11% on 85,100 sales forecast for 2017.
Middle East
After experiencing construction equipment oversupply issues from 2007-2012 in some of the Africa/Middle East region’s wealthier nations, the Africa/Middle East market is tipped by the Freedonia Group to advance at a faster pace in the five years to 2017.The Saudi Arabian government’s initiatives to transform the country from an oil-based economy to one more reliant on manufacturing and services is said by Timetric to be behind the Saudi Arabia construction industry’s CAGR of 6.94% in the period 2008-2012. Further CAGR, albeit slightly less, of 5.54% in 2012-2017 will be fuelled, says Timetric, by an increase in government expenditure in infrastructure construction. Population growth and a rise in disposable income is also said to have increased demand for residential, commercial and institutional buildings.
Timetric reports that the Gulf Cooperation Council (GCC) is undertaking a $15.5 billion railway network project that will connect GCC states in the Middle East by 2018. Saudi Arabia will be part of this eye-catching project, which involves the construction of 2,177km of rail line, covering the Gulf Coast and extending from Oman to Kuwait, passing through the United Arab Emirates (UAE), Bahrain, Qatar and Saudi Arabia.
Euromonitor International says the Saudi Arabian construction industry is expected to demonstrate average growth of 8% 2013-2018, with the country continuing to have the most attractive construction market in the Gulf region.
Winning the bid to host the World Expo 2020 proved a boon for the UAE construction industry, notes Timetric. The government is said by the independent research firm to be determined to develop the country’s infrastructure and plans to speed up construction activities over the 2014-2018 period. Timetric says the 2013 United Nations Conference on Trade and Development (UNCTAD) cited UAE as the most attractive country for foreign direct investment in GCC countries.
According to the World Economic Forum’s Global Competitiveness Index 2014-2015, the UAE also has the world’s highest quality roads. In 2014, Dubai’s Road and Transport Authority (RTA) allocated $1.9 billion, with the largest share going on road infrastructure. The RTA has also revealed that a 2012-2016 development plan will see $272.3 million spent on developing internal roads in residential areas.
Growth in Qatar’s construction industry has been strong since Q2 2012, reports Timetric. The future outlook is also said by the same source to be positive, with the government’s five-year development plan for the country supporting the construction industry by allocating $125 billion for development projects during 2011-2016. Of this, $65 billion will be invested in infrastructure works.
The 2022 FIFA World Cup is expected to be a major driver for construction industry growth over the period 2014-2018. The government plans to spend $160 billion on linked projects, representing, says Timetric, 40% of its 2012-2016 infrastructure projects budget.
Similar to Saudi Arabia, the Kuwaiti government is trying to lower Kuwait’s reliance on oil revenues and approved a $130 billion National Economic Development Plan for 2010−2014, with the aim of diversifying the country’s economy. Subsequently, reports Timetric, significant investments are being made to improve the country’s transport infrastructure and increase participation in the private sector; although progress is said by the independent industry research company to have slowed due to excessive bureaucracy and corruption. Nevertheless, Kuwait construction industry output is expected by Timetric to record a CAGR of 4.94% 2013−2017.
Oman’s eighth five-year (2011-2015) development plan, notes Timetric, the government intends to invest $3.2 billion by 2015 in construction, repair and maintenance of roads and bridges across the country. The government also plans to spend $1.3 billion in the construction, expansion and development of the nation’s ports. Timetric tips this government spending to drive growth in the infrastructure construction market to 2018.
