Skip to content
Search

Press release

4 NOV 2021

Saudi construction in front as pace of new development picks up across MEA

  • New infrastructure workloads in front with growth also seen in residential works
  • Fall in non-residential construction flattens out
  • Cost of materials and financial constraints biggest factors holding sector back
  • Quarter of respondents say investors haven’t shifted to support green building designs

Middle East and Africa RICS Construction Monitor – Q3 2021

Double digit growth in infrastructure and private house building projects saw total construction workloads increase by the strongest rate on record, this according to a survey of experts and professionals working in the sector across the Middle East and Africa by the Royal Institution of Chartered Surveyors (RICS).

Total workloads across the region jumped to a net balance of +18%, up from +8% in the previous quarter, with Saudi Arabia performing highest with a net balance workload of +54%. Looking across the region, infrastructure works and private residential saw a net balance increase of +24% and +12% respectively, while non-residential works flattened at 0% after five consecutive quarters of negative returns.

Over the next twelve months respondents reported upbeat expectations across the three primary sectors, with private residential, commercial and infrastructure works all expected to continue growing by double digit figures (net balances +32%, +37% and +51% respectively).

The most significant factors holding the construction sector back, according to respondents, remained the high cost of materials (83%), financial constraints (84%) and insufficient demand (65%). In addition, the costs relating to construction, materials and skilled labour are expected to increase by 7%, 8% and 5% respectively – showing that the cost of delivering projects in the region is expected to rise.

While new business enquiries increased in Q3, up by a net balance of +12%, profits are expected to be squeezed at -31% over the next year – which can be attributed to growing costs.

With the COP-26 conference currently underway in Glasgow UK, respondents reported a reluctance amongst investors to adopt green building designs or carbon neutral construction practices. Around 25% said they’d seen no shift in support and nearly 48% saying only niche investors had shown an interest in building more sustainably.

In addition to this, 22% of respondents confirmed that biodiversity was not taken into account for any of the schemes on their books while 44% said under half of the projects accounted for it – painting a challenging picture that the construction sector is playing catch-up* with wider concerns around sustainability and the impact of the planet.

Simon Rubinsohn, RICS Chief Economist, said:

“The picture in the construction industry in the Middle East and African countries captured by this survey is rapidly improving according to the feedback received. Current workloads have been rising but the expectation numbers are even more impressive.

“Although infrastructure is projected to lead the way, both residential and non-residential development are anticipated picking up speed.

“Finance is viewed as a major impediment to development but this could lessen as the stronger trend in activity takes hold. That said, with rising construction costs continuing to outstrip likely increases in tender prices the profits picture is likely to remain a little clouded in the near term.”

-ENDS-

NOTES TO EDITORS

The full report from the RICS Economics team can be found here: INSERT LINK.

*RICS is working as part of an international coalition of organisations and professional bodies to publish the world’s first carbon accounting framework – known as ICMS3 – which will set out how the sector can move towards more sustainable practice. This framework will be published in the coming months.

About RICS

We are RICS. Everything we do is designed to effect positive change in the built and natural environments. Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

FOR MORE INFORMATION

John Bayliss, Media Relations Officer: jbayliss@rics.org or 0207 695 1540

We are RICS

Everything we do is designed to effect positive change in the built and natural environments.

Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

Our Press Contacts

Members of our press team are on hand to help you with journalist queries
 

FIND YOUR PRESS CONTACTS