Construction activity remains ‘robust’ in Saudi Arabia: RICS

The outlook for infrastructure and construction workloads in Saudi Arabia remains robust in the next 12 months compared to its regional peers, given that oil prices are slated to rise, RICS Middle East said in its recent construction and Infrastructure survey.

“This solid pipeline of new activity appears to support the outlook for an increase in workloads over the next 12 months, as well as headcount,” it said.

A tighter supply stemming from a tightening of US sanctions on Iranian oil exports, renewed conflict in Libya and a drying up of global spare capacity is likely to put upward pressure on the price of oil, the report added.

In addition, respondents in the UAE expect headline workloads to increase over the next year, albeit at a more modest pace.  The first quarter of 2019, however, saw a general reduction of new business enquiries and new workloads in Oman, UAE and Qatar.

Tender price predictions for building and civil engineering over the next 12 months in Oman and the UAE indicate a decline, with more than 70 percent of survey participants citing competition and a lack of demand as a constraint on activity.

Further margin deterioration is expected over the next year in the region, except for Saudi Arabia, due to the increased cost of materials and the difficulty of passing the increase on to clients.

Meanwhile, more than 90 percent of contributors in Oman, UAE and Qatar reported financial constraints as a drag on activity, likely a result in the deterioration in profit margins.

The Middle Eastern market also experienced a pullback in private commercial and industrial workloads. However, this was not the case for infrastructure workloads, of which roads and water and utility projects workloads were noted to have increased regionally this quarter.

Majority of the participants in Saudi Arabia, Oman and UAE, saw the need for new projects over the repair and maintenance of existing infrastructure, the survey stated.