News Column

UAE tops ME in infrastructure investments

June 29, 2014



There are already signs that these capacity constraints are beginning to impact project delivery — 95 per cent of respondents say their projects are delayed, with a staggering 45 per cent delayed by more than six months.



The UAE ranked top in the Middle East for investment in capital projects and infrastructure, revealed PwC's latest survey on Saturday.







The survey finds renewed optimism, with 75 per cent of respondents expecting an increase in spending in the coming 12 months, largely driven by mega events including Dubai Expo 2020 and the 2022 Fifa World Cup in Qatar, as well as increased spending on social infrastructure including housing, education and healthcare.







However, this is only half the story; the results show that there is a "capacity crunch" looming on the horizon — in other words, market capacity is failing to keep pace with demand. PwC says there are two fundamental areas that will limit the ability to progress with project plans: people and financial resources.







There are already signs that these capacity constraints are beginning to impact project delivery — 95 per cent of respondents say their projects are delayed, with a staggering 45 per cent delayed by more than six months.







However, client decision-making is also a big concern, with 35 per cent of contractors citing it as the greatest challenge they face delivering projects.







"Whilst our survey shows a good dose of optimism, there is a capacity crunch looming which threatens the delivery of projects. It is already having an impact, as we are beginning to see more delays on projects that are underway," said Stephen Anderson, PwC's leader of capital projects and infrastructure in the Middle East. "Broadly speaking, these problems have been apparent in our region's infrastructure sector for several years, but the increase in activity is making them more acute. They need to be urgently addressed if the region is to deliver on its ambitions," Anderson added.







The ability to find skilled people — both in terms of quality and volume — was identified as a key challenge for both project owners and contractors.







"Difficulties securing funding are also expected to lead to project delays — our survey suggests that there simply isn't enough funding available. The sheer scale of commitments is making private sector finance a more attractive, and indeed necessary, option for funding infrastructure projects."







Respondents identified the UAE as their top target for investing in capital projects and infrastructure, closely followed by Qatar and Saudi Arabia. Strong economic growth and budget surpluses in these countries provide the backbone for ambitious spending plans, as their governments continue to invest in economic diversification while at the same time spending to maintain or expand hydrocarbon and downstream petrochemical production.







However, optimism in the rest of the region is not as high, as political instability continues to affect confidence. The proportion of respondents to the survey saying they would be targeting projects in Egypt fell substantially compared to our last survey, and it remains to be seen if the election of El Sisi as president, along with announcements to expand infrastructure programmes, can restore confidence.
















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Source: Khaleej Times (United Arab Emirates)


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