GCC Construction 2021Mid Year Review & Forecast – June 2021

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Tracking construction projects in 65 countries across the MEA region.

Industries covered:

Real GDP Growth in the GCC Region by Country (%)2021 Forecast

https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/ARE/SAU/QAT/KWT/OMN/BHR

3.12.9

2.4

0.7

1.8

3.3

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

UAE KSA Qatar Kuwait Oman Bahrain

Real GDP Growth…

Economic Indicators and Recent Government Initiatives

• MENA GDP Growth @ 4% in 2021, up from -5% in 2020

• GCC GDP Growth @ 2.7% in 2021, up from -6% in 2020

• GCC Non-Oil Growth GDP forecasted @ 3% in 2021 from -5.7% in 2020

Other Landmark Announcements in 2021• KSA’s Public Investment Fund (PIF) will invest a minimum of $40bn annually in domestic projects and

investments by the end of 2025.

• Saudi Arabia will invest US$220 billion to transform Riyadh into a global city by 2030.

• UAE’s new industrial strategy, Operation 300bn will increase contribution of the manufacturing sectorfrom US$36.2 billion to US$81.7 billion in the national economy over the next 10 years.

• A 5% Value Added Tax (VAT) on a wide variety of goods and services came into force across Omanfrom 16th April 2021.

• Effective June 1st 2021, foreigners who intend to start a business in the country will no longer berequired to seek a local sponsor or shareholder in UAE in most sectors.

Average Crude Oil Price In US$ Per Barrel (2020-2021)

https://www.statista.com/statistics/262858/change-in-opec-crude-oil-prices-since-1960/

41.47

54.38

61.0564.56 63.24

0.

10.

20.

30.

40.

50.

60.

70.

2020 Average Jan-21 Feb-21 Mar-21 Apr-21

Impact of Covid-19 on GCC Construction

• GCC GDP Growth dipped to negative growth (-6%) in 2020 against a predicted positive growth of 2.5% as forecasted in January 2020.

• GCC Contractor Awards forecasted for 2020 in Jan 2020 was US$143 Bn, but what actually got awarded was only US$75 Bn.

• Many project announcements and growth plans derailed due to governments and project owners putting a cut on project spending.

• Capacity of banks to lend to projects has been squeezed due to covid-19 as well as low oil prices.

• Construction sites remain mostly active in the region even during peak Covid days.

• Supply and logistics sector being affected hit progress or completion of many projects.

• Travel constraints on personnel and equipment also resulted in delays.

• Project owners took a slow approach in awarding projects and also to commence mobilization on already awarded projects. While some project owners renegotiated with contractors already awarded projects, few went ahead to award projects to make use of the situation and were able to get better rates.

Impact of Covid-19 on GCC Construction

• Sharply rising fiscal deficits are forcing GCC governments to make cuts to their planned expenditure on all fronts and is also forcing governments towards international debt markets.

• Companies were forced to reevaluate their procurement strategies and there was a growing preference towards suppliers with local/regional manufacturing/storage capabilities.

• On a positive outcome, construction sector adapted to digital ways faster than everybody envisaged with companies rolling out work-from-home, cloud-based collaboration, online site inspections etc. to deal with the disruption.

• We also witnessed governments and leaderships giving more focus on bigger issues like the pandemic and the economic woes, which helped normalize regional relationships - KSA, UAE, Bahrain and Egypt reached agreement with Qatar to restore ties between the countries; UAE, Bahrain, Morocco signed agreements to establish full diplomatic relations with Israel; Iraq reopened border with KSA after 30 years.

Value of GCC Contractor Awards by Country (2020-2021)

2550223549

17488

3174 35731531

25414

3589734500

9192

3318 2906

7818

17027

22739

3256

496 9240

5000

10000

15000

20000

25000

30000

35000

40000

UAE KSA Qatar Kuwait Oman Bahrain

2020

2021 Forecast2021 (Actuals) till 20th June 2021

Contractor Awards by Industry (2020-2021)

6172

2326

40751

12520 13435

38898

5107

39131

12317

15774

24910

1300

14931

46826437

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Oil & Gas Industrial Buildings Power & Water Infrastructure

2020

2021 forecast2021 (Actuals) till 20th June 2021

GCC Contractor Awards (2010-2021)

180717

161000

130265

161899

185189

203119

160312150176

137409 133059

75127

111227

0

50000

100000

150000

200000

250000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021(f)

Value in US$ Mn

GCC Contractor Awards (2010-2021) Vs Oil Price

180717 161000 130265 161899 185189 203119 160312 150176 137409 133059 75127 111227

77.38

107.46 109.45105.87

96.29

49.4940.76

52.51

69.7864.04

40.47

59.74

0

20

40

60

80

100

120

0

50000

100000

150000

200000

250000

20102011

20122013

20142015

20162017

20182019

2020

2021(forecas

t)

Value in US$ Mn

Oil Price in US$ per barrel

Top Clients in GCC who awarded projects to Contractorsin 2021 till June 2021

• Qatar Petroleum (QP)1

• Royal Commission for the Riyadh City2

• Kuwait Oil Company (KOC)3

• Saudi Aramco4

• Saudi Water Partnership Company (SWPC)5

• Public Works Authority (Ashghal)6

• ALDAR Properties7

• North Oil Company (NOC), Qatar8

• The Red Sea Development Company (TRSDC)9

• Saudi Electricity Company (SEC)10

Top Clients in GCC who announced Building Projectstill June 2021

• Royal Commission for the Riyadh City, KSA1

• The Red Sea Development Company, KSA2

• Public Investment Fund, KSA3

• Aldar Properties, UAE4

• Diriyah Gate Development Authority, KSA5

• Shomoul Holding Company, KSA6

• Saudi Amaala Company, KSA7

• Moafaq Al Gaddah (MAG) Group, UAE8

• Wasl, UAE9

• Public Works Authority (Ashghal), Qatar10

Top Contractors in GCC who won Building Projectstill June 2021

• Al Bawani Company, KSA1

• Fibrex Construction Group, UAE2

• Intermass Engineering Contracting Co., UAE3

• Freyssinet Limited, KSA4

• Shapoorji Pallonji & Co. Ltd., KSA5

• Arabian Construction Company (ACC), UAE6

• First Group Company for General Trading & Contracting, Kuwait

7

• China Railway No.5 Engineering Group Co Ltd, Kuwait8

• United Engineering Construction (UNEC), UAE9

• Blumer-Lehmann AG, KSA10

Major GCC Projects Awarded to Contractors in 2021

No. Name Country Client Consultant ContractorEst. Project Value (US$ Mn)

1North Field East Project - 4 Liquefied Natural Gas Mega Trains (EPC 1) Qatar Qatar Petroleum (QP), Qatargas Chiyoda Corporation Chiyoda Corporation, Technip 13000

2 Sports Boulevard in Riyadh - Package 1B Saudi ArabiaRoyal Commission for the Riyadh City (RCRC)

Typsa Group, Coen + Partners Al Bawani Company Ltd. 1500

3 Soil Rehabilitation at Northern Kuwait Kuwait Kuwait Oil Company (KOC)Kuwait Company for Process Plant Construction & Contracting (KCPC) 1232

4Al Shaheen Oil Field Development - Phase 3 (Pack 5, 6, 7 & 8) Qatar North Oil Company (NOC)

PTSC Mechanical & Construction (PTSC M&C), Daewoo Engineering & Construction Company Limited, South Korea, Subsea 7, Rosetti Marino

1000

5 Yas Living in North Yas (NOYA), Abu DhabiUnited Arab Emirates ALDAR Properties

Hyder Consulting (Arcadis) Fibrex Construction Group 989

6 Belbazem Oil Field DevelopmentUnited Arab Emirates Al Yasat Petroleum

National Petroleum Construction Company (NPCC), Petrofac Ltd.

National Petroleum Construction Company (NPCC) 744

7Housing Project in Northern Riyadh - Phase 1 A (Riyadh Community Development) ( Package 2 ) Saudi Arabia Public Investment Fund (PIF) Shapoorji Pallonji & Co. Ltd., Siemens 507

8MAG City (District 7 in Meydan City) - 546 Townhouses

United Arab Emirates

Moafaq Al Gaddah (MAG) Group Parsons Corporation

Intermass Engineering Contracting Company 500

9Jubail Island in Abu Dhabi - Phase 1 - Plot No. 1A , Sector JS

United Arab Emirates

Jubail Island Investment Company (JIIC)

EHAF Consulting Engineers Arabian Construction Company (ACC) SAL 300

10The Red Sea Project - Sheybarah South & Ummahat Al Shaykh Islands - Shurayrah Bridge Saudi Arabia

The Red Sea Development Company (TRSDC) Jacobs Archirodon Construction Company 300

11 587 Houses at East Sabah Al Ahmad - Part 2 KuwaitPublic Authority for Housing Welfare (PAHW)

First Group Company for General Trading & Contracting 227

12Marmul Main Production Station (MMPS) - Gas Compression Oman

Petroleum Development Oman (PDO)

Petroleum Development Oman (PDO) Petrofac Ltd. 200

Major GCC Projects Expected to be Awarded to Contractorsin the next 6 months

No. Name Country Client ConsultantEst. Project Value (US$ Mn)

1Hail and Ghasha Sour Gas Development - Manayif Process Plant - Package 4

United Arab Emirates

Abu Dhabi National Oil Company (ADNOC)

Bechtel Corporation, Engineering Consultants Group S.A. (ECGSA) 4800

2 Facility E - IWPP QatarQatar General Electricity & Water Corporation (Kahramaa) Energo 3000

3 Borouge 4 Complex - Package 2 - Mixed Feed Cracker UnitUnited Arab Emirates

Abu Dhabi Polymers Company (Borouge), Borealis A/S Representative Office Maire Tecnimont 2000

4 Jurassic Production Facility - JPF4 and JPF5 Kuwait Kuwait Oil Company (KOC) 1621

5 Jafurah Gas Plant - Gas Processing Unit- Package 2 Saudi Arabia Saudi Aramco Wood Group 1500

6Renewable Energy Program - Round 3 - 700MW Solar Plant In Alrass Saudi Arabia

Renewable Energy Project Development Office (REPDO) 900

7 Guggenheim Abu Dhabi on Saadiyat IslandUnited Arab Emirates

Tourism Development & Investment Co. (TDIC) Frank Gehry, US 750

8 The Red Sea Project - Southern Dunes Hotels Saudi ArabiaThe Red Sea Development Company (TRSDC) Foster + Partners 200

9 Amaala - Miraya Saudi Arabia Saudi Amaala Company HKS Architects 500

10 QAFCO Expansion VII Qatar Qatar Fertilizer Company (QAFCO) 450

11Mixed Use Tower for Galleria Investments in Sheikh Zayed Road (City Tower 1)

United Arab Emirates Galleria Investments LLC Arcadis 409

12 Bay Residences in Hayat Island, Ras Al KhaimahUnited Arab Emirates RAK Properties

Naga Architects & Designers Planners 350

Future Outlook

• GCC Contractor Awards is expected to increase nearly 50% in 2021 compared to 2020 but will be still much lower than the last 10-year average.

• Analysts predict the average oil price to be higher in 2021 compared to 2020, but will still remain relatively subdued.

• No. of Public Private Partnership schemes to rise with KSA alone having over 100 PPP projects in the pipeline

• Social infrastructure projects (housing, healthcare, education etc.) to keep the building construction sector busy with a healthy pipeline of projects in design and tender stage in addition to active master development schemes.

• Utility projects remain a priority for the region.

• The region has large renewables capacity building program with KSA alone targeting 58.7GW by 2030, and developing alternate energy based Hydrogen a key agenda.

• High Expectations on KSA and Egypt to take the Construction Industry Forward.

• Expo 2020 to have a lasting impact on Dubai Destination and Economy.

• Improving regional relationships will help improve trade and business.

• Supporting local SMEs and manufacturers has become a matter of economic urgency and we will see increased activities and growth in these areas.

• Even with lower Oil prices, Oil and Gas sector is still attractive with many projects in FEED Stage and EPC Bidding Stage and more fields being developed.

• High Valued Rail Projects in Kuwait and Bahrain if proceed as planned, will be a game changer for the construction markets in these countries.

Future Outlook

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