© 2013 MEED Insight
25 May 2016, Dubai
Presented by Ed James
Director of Content and Analysis, MEED Projects
@EdJamesMEED
Outlook for the GCC projects market
Challenges, opportunities and key projects
© 2013 MEED Insight
All the project information in this
presentation is sourced from MEED
Projects
MEED Projects is a Middle East, North and East Africa project tracking platform. It has
two major functions; it is a business development tool to help you find new business
opportunities and an analysis tool so you can assess the feasibility of potential new
markets and projects.
5 key reasons to sign up for a demo:
• Identify new business opportunities from over 10,050 active projects worth over $4.1 trillion
• Improve performance in current markets and evaluate new markets with 20 countries covered
• Build the right company relationships using our database of over 11,200 companies on live projects
• Target over 18,000 key decision makers ahead of your competitors
• Forecast market developments by country and project type to inform your strategic planning
© 2013 MEED Insight
-
2
GCC Macroeconomic Review1
3 Source: FT
Average oil price 2013-2015 ($ a barrel)
© 2014 MEED Projects
The oil price – the new paradigm
© 2014 MEED Projects
WTI started the year trading at $39 a barrel. Currently, it is pricing at $31.
4 © 2014 MEED Projects© 2014 MEED ProjectsSource: IEA
The result – major deficits
145.8
137.2132.6 130.2 129.7
113.2 109.4
73.665.3 62.8
0
20
40
60
80
100
120
140
160
180
200
Libya Iran Algeria Bahrain Iraq Oman SaudiArabia
UAE Qatar Kuwait
$ price barrel budgets are based on
20142015
5 Source: MEED Projects; *Kuwait budget runs April-March
Budgeted expenditures comparison 2014-16 ($bn)
© 2014 MEED Projects
Budgeted expenditures largely stable
© 2014 MEED Projects
227
30.9
13.2
64.8
12.6
54.7
0
50
100
150
200
250
Saudi Arabia Oman UAE Kuwait* Dubai Qatar
2014
2015
2016
6 © 2014 MEED Projects
BUT – many weapons in the GCC arsenal
© 2014 MEED Projects
Firstly, the correlation between oil prices and project spending is not as close as
everyone believes
And GCC states could:
Privatise or part privatise state assets i.e. Aramco
Sell landbank
Introduce sales tax
Lift subsidies and tariffs
Drop oil output!
Don’t believe all the doomsayers!!
7
Regional Project Marker Growth Drivers & Barriers to Growth
Negative factors
Positive factors
Strong government
fiscal reserves and
stable budgets
Localised
drivers/World Cup
and Expo
Demographic
Growth
Political
Commitment to
Invest in Domestic
Infrastructure 2 3
1 4
Reluctance of
Clients to Push
Ahead with Projects
Wider economic
impact i.e. on real
estate
Political & Social
InstabilityCollapsing revenues
2 3
1 4
© 2014 MEED Projects
Positive and negative factors
© 2014 MEED Projects
© 2013 MEED Insight8
GCC Projects market2
9 © 2014 MEED Projects
Market Analysis by Country
© 2014 MEED Projects© 2012 MEED Insight
Value of GCC contract awards by country, 2008-14
Source: MEED Projects
2229
25355
14829
29695
41989
56453
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Bahrain Kuwait Oman Qatar Saudi Arabia UAE
2008
2009
2010
2011
2012
2013
2014
Market Analysis by Sector
10
Value of GCC Contracts Awarded by Sector, 2008 – 2014 ($m)
Source: MEED Projects© 2014 MEED Projects
2008
2009
2010
2011
2012
2013
2014
1845
68896
5716 4311
28290
18209
36021
7262
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Chemical Construction Gas Industrial Oil Power Transport Water
$m
1.5
27.4
13.7
28.9
59.0
42.5
172.9
0
20
40
60
80
100
120
140
160
180
200
Bahrain Kuwait Oman Qatar Saudi Arabia UAE GCC
Pro
jec
t a
ward
s (
$b
n)
MEED Forecast for GCC Contract Awards, 2015 ($bn)
Source: MEED Projects. Note: forecast is made based on hard data analysis of project pipeline in each country
GCC Projects Market:
January 2015 forecast
1.5
27.4
13.7
28.9
59.0
42.5
172.9
3.2
31.5
13.6
29.3
49.8
37.4
164.8
0
20
40
60
80
100
120
140
160
180
200
Bahrain Kuwait Oman Qatar Saudi Arabia UAE GCC
Pro
jec
t a
ward
s (
$b
n)
2015 Forecast 2015 Act
MEED Forecast for GCC Contract Awards vs. actual, 2015 ($bn)
Source: MEED Projects. Note: forecast is made based on hard data analysis of project pipeline in each country
GCC Projects Market:
2015 market performance vs. January 2015 forecast
MEED Forecast for GCC Contract Awards, 2016 ($m)
GCC Projects Market:
2016 contract award forecast
2,810
24,363
13,451
22,253
40,761
36,513
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Bahrain Kuwait Oman Qatar Saudi Arabia UAE
Pro
ject
aw
ard
s (
$m
)
Total = $140bn
Source: MEED Projects. Note: forecast is made based on hard data analysis of project pipeline in each country
2016 YTD performance
14
Value of GCC contracts awarded Q1 2016
Source: MEED Projects© 2014 MEED Projects
1705
4861
4001
1673
7233
10080
0
2,000
4,000
6,000
8,000
10,000
12,000
Bahrain Kuwait Oman Qatar SaudiArabia
UAE
Contr
act
aw
ard
s $
m
Total = $30bn
Dubai largest contracts awarded Q1
© 2014 MEED Projects
Project Value ($m)ICD - Palm Jumeirah: Royal Atlantis Resort & Residences, Phase 2 840
Emaar Properties / Dubai Holding : Dubai Creek Residences : Phase 1 650
Indigo Properties - Indigo Zen 409
Nakheel - Palm Jumeirah : Palm Gateway (Tender No. DMS 141324) 386
ICD-Brookfield Management - DIFC : ICD Brookfield Place 370
Al Wasl - Mandarin Oriental Jumeirah Beach Club Resort 190
Dubai Islamic Bank - Badr Project (Madain Al Emarat) : Phase 1 188
Dubai RTA - Intersection in Karama Area (Contract No. R1013/1 ) 166
MOPW - Upgrading Of Mleiha Road From Sheikh Khalifa Road : Phase 1 140
Omniyat / Drake & Scull - One at Palm Jumeirah 136
DEWA - Supply and Installation of Water Pipelines (2131500016): Section B
& C 128
GRDI - Downtown Dubai : HSBC Bank Headquarters 127
Dubai RTA - Business Bay : Parallel Roads Corridor (Contract No.
R881/282) 121
Meydan Sobha - MBR City : District One: Phase 3 80
Damac - Business Bay : Majestine Allure 80
Union Properties - Motorcity : Oia Residences 64
Al Tayer Group - Meydan City : Al Manzel 1 & 2 56
Dubai RTA - Development of Al Awir Road and International City Accesses 52
DEWA - Supply and Installation of Water Pipelines (2131500016): Section A 51Source: MEED Projects
Qatar contracts awarded Q1
Source: MEED Projects© 2014 MEED Projects
Contracts awarded in Qatar 2016 year to date
Project Sector Value ($m)
Qatar Primary Materials Company - Bulk Materials Handling System (MP-13-
BMHS) Industrial 325
QP- Strategic Petroleum Products Storage Project: Pipeline Oil 180
QP- Strategic Petroleum Products Storage Project: Storage Tanks Oil 180
QP- Strategic Petroleum Products Storage Project: Receiving Facility Oil 180
Al Mana Group - Al Mana Tower (Burj Al Mana) Construction 158
QF - Education City: Qatar International Golf Club Construction 120
ASHGHAL – IDRIS(Package1):Lateral Interceptor Sewers: LIS 1 Water 90
Daruna Development - Integrated Accommodation Facility Construction 40
LREDC - Lusail: Qetaifan Islands South: Spine Road Infrastructure (CP08-A1) Transport 25
© 2013 MEED Insight17
The Future3
Forecast:
Projects Pipeline - GCC
18
Budget Value of Planned & Un-awarded Projects by GCC Country ($bn)
Source: MEED Projects© 2014 MEED Projects
Forecast:
Construction Projects Pipeline - GCC
19Source: MEED Projects
Budget Value of Planned & Unawarded GCC Construction Projects ($m)
© 2014 MEED Projects
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Bahrain Kuwait Oman Qatar Saudi Arabia UAE
2017 and beyond
20
The market will depend on several factors
The oil price (obviously)
But more importantly – governments’ commitment to maintain spending in the face
of falling revenues to keep the economy moving
The speed of enacting legislation, restructuring, prioritization of project plans, and
ability to obtain funding
Contractors and the supply chain’s efforts to inform the government and support
them in accelerating the market
Time pressures on Expo2020, and the World Cup
Situation should become clearer in the second half of this year
Source: MEED Projects © 2014 MEED Projects
Conclusion
21
A real slow down in activity outside Dubai
The market is now split into two streams: good performers – Dubai, Kuwait and Oman; and poor
performers – Qatar, Abu Dhabi and Saudi Arabia
Dubai appears to be decisively tacking the oil price issue by announcing a number of new
projects and pushing ahead with its vision
On the other hand, Qatar and KSA in particular are struggling as the government is unable to
find or release funds to pay for projects
As a result it appears that this year will substantially underperform against forecast. At the
current rate, the projects market is set to hit about $120bn worth of contract awards, well down
on the $165bn hit last year
If this is the case, it could be a disastrous year for the regional projects market and it remains
to be seen whether contractors can maintain the cashflow levels needed to stay in business
and/or pay their workers unless the governments act to alleviate the crisis
Source: MEED Projects © 2014 MEED Projects
© 2013 MEED Insight© 2014 MEED Projects
25 May 2016, Dubai
Presented by Ed James
Director of Content and Analysis, MEED Projects
@EdJamesMEED