Construction in the Gulf booms again

Construction in the Gulf booms again:

After nearly three years of oil prices comfortably above US$100/barrel, the Gulf is awash with liquidity and a renewed confidence, similar to that seen in 2006‑08, which is manifesting itself in a second construction boom. This is led by public‑sector driven megaprojects, but there are also a raft of private-sector real estate developments under way. This contrasts with 2009‑10, when private-sector construction activity lulled in many countries and a number of major projects were cancelled or put on hold indefinitely.

The public sector in most Gulf Co-operation Council (GCC) countries continued to spend after the bursting of the regional real estate bubble in late 2008. A recent report by Qatar National Bank showed that capital expenditure recorded in GCC budgets grew in ever year since 2004 (barring a small blip in 2012) and averaged US$115bn in 2011‑12, up from US$68bn in 2008. Spending was also higher as a share of GDP, at 7.1% in 2012 compared with 5.7% in 2008. Similarly, output in the regional construction sector has continued to grow in real terms over the last five years, including by around 5% in 2012, and is estimated to be about one-quarter larger than it was in 2008.

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