Saudi Arabia is set to drive growth in regional infrastructure and construction spending over the next 15 years, according to a new report by BofA Merrill Lynch.
Its study said that the construction sector in the Middle East and North Africa will be a key beneficiary of "reforms to raise productivity of the non-oil sector".
The MENA infrastructure and construction market is among the world's most attractive given its sheer size, according to the report.
Forecasting figures predict a total of $4.3trn will be invested in construction projects across the MENA region by 2020, representing an increase of almost 80 percent from today's spend.
Philip Southwell, Bank of America Merrill Lynch president and country executive, Middle East and North Africa, said: "Due to many years of underinvestment, we expect Saudi Arabia to take the lead in terms of construction spending in the MENA region as the kingdom responds positively to pressing social needs such as labour, housing and education."
The report said the region is expected to account for 12 percent of the global emerging markets and 4.4 percent of the world construction markets within the next decade with Saudi Arabia expected to continue leading the way.
It added that although MENA contract awards have declined by 41 percent so far in 2012 from a year earlier, the main reasons can be primarily attributed to delays in awarding petrochemicals projects in Egypt and delays in awarding construction and infrastructure contracts in the UAE, Kuwait and Iraq.
"The construction and infrastructure sub-sectors in Saudi Arabia, however, remain strong, growing by 177 percent over the same period, and currently accounting for 46 percent of the 2012-2013 MENA project pipeline totaling $448bn," said Mutashar Murshed, Merrill Lynch kingdom of Saudi Arabia CEO.
"It is a trend we expect to continue," Southwell added. "With its young and expanding population, Saudi Arabia should remain the most buoyant market, in line with its overall economic development plan.
"Furthermore, the recent approval of the mortgage law should help to drive growth in residential construction in response to the current housing shortage."
Arabian Business
24 July
