Regional focus: Middle East

By Steve Skinner10 November 2010

Halcrow designed and is supervising construction of the biggest rock tunnel in the UAE which passes

Halcrow designed and is supervising construction of the biggest rock tunnel in the UAE which passes under the Hajjar mountain range. The 1.3 km long twin-bore dual-carriageway road tunnel is a key par

Headlines last year about the debt problems of State-owned Dubai World and its subsidiary, property development company Nakheel gave the impression that all was not well with the construction industry across the region.

The reality is that the Middle East remains one of the most dynamic markets globally with CEO of contractor Leighton Holdings, Wal King estimating its value at US$ 2.6 trillion. While this figure may represent the high end of any estimates, even lower estimates show the market to be globally significant.

Regional managing director for the Middle East office of the Halcrow design and project management consultancy, David Yaw told iC, "If we look back to the halcyon days of 2007 and 2008 when everything was frenetically busy, everyone in the region had more work coming at them than they could possibly even think about coping with.

This in turn hit the government agencies, especially in Dubai, which weren't able to provide infrastructure development quick enough, and who ended up turning to the developers themselves to provide the infrastructure."

Mr Yaw believes the slowdown is not unhealthy as it has forced the focus to return to projects that actually generate wealth for the economy.

"While the halcyon days may have gone, I think the worst is over, things are stabilising and people are starting to talk more about the future again and particularly in relation to Abu Dhabi. I doubt we'll see a spectacular surge again, but there is a hunger for large infrastructure-type projects," he said.

Managing director of the property division at Hyder Consulting, Mario Pishiri shares the view with a slightly different take, when he says that the Dubai World financing issues didn't impact the construction industry that heavily.

"Consolidation across the industry was the result of the global financial crisis and its effect on supply and demand as well as project financing rather than the troubles encountered by Dubai World," he said.


Mr Pishiri told iC, "Governments are now taking the opportunity to invest in infrastructure to meet the demands of their populations and to generate growth in the regional economies.

"Clearly, the pure private sector property market is slow at present as supply exceeds demand. There is, however, strong investment in social infrastructure and energy as regional governments attempt to secure their energy infrastructure and to diversify away from oil based sources with such as nuclear energy programmes."

Evidence of this shift comes in the shape of a US$ 20 billion project to construct four 1400 MW capacity nuclear power stations in Sila, west of Abu Dhabi in the UAE. The contract was awarded to a Korean consortium led by Korea Electric Power Corporation (KEPCO) and construction is scheduled to commence within the next 18 months and be completed by 2017.

Other major infrastructure projects include the Gulf Cooperation Council (GCC) railway, the first tranche of which is scheduled to be constructed in the UAE at a cost of US$ 11 billion. "The 265 km long line from Ruwais via Habshan to Shah is all connected to the movement of sulphur from the sour gas treatment plants," said Mr Yaw. "Estimates are that 25000 tonnes per day of sulphur will be transported to Ruwais where it can then be exported by sea," he said.

The first section of the GCC railway is expected to be completed within three years and Union Railways intends to seek expressions of interest for the construction contracts within the next two months. Regionally, the aim is to create a 2177 km long railway network linking the six Gulf States.

Mr Yaw told iC, "What's happening in Abu Dhabi is much more linked to industry and infrastructure development rather than 'nice to have' real estate. The Abu Dhabi Sewerage Services Company (ADSSC) for example, is currently investing US$ 1.09 billion in its strategic tunnel enhancement programme (STEP) featuring a 42 km long sewerage tunnel and a US$ 572 million pumping station."

Also in Abu Dhabi, the US$ 6.8 billion Midfield terminal at Abu Dhabi airport is under construction, along with a new 4100 m long second runway, a new control tower and new cargo facilities, all of which are scheduled for completion in 2011.

Initially, the expansion will see Abu Dhabi airport capable of handling an additional 20 million passengers per year, although this is projected to rise to 50 million as Abu Dhabi develops as a major Middle East transport hub.

"There is no escaping that the Middle East is developing into a major international trade entrepรดt," said Mr Yaw. "The region is changing the way people think about travelling."

Managing director for transportation and infrastructure at Hyder Consulting, Andrew Body told iC, "Governments around the region have recognised the improvements to productivity and lifestyles that can be found through investment in transport infrastructure. Ports, airports, roads and rail all represent critical infrastructure improvements that will contribute to the ambitious economic and tourism targets set for the region."

Mr Body said that Abu Dhabi, Qatar and Saudi Arabia all have significant road investments planned over the next five years as well as a number of port developments and airport expansions.

CEO of contractor Leighton Holdings, Wal King said, "GCC countries have large financial reserves accumulated over the past five years, which helped support them through the economic downturn. Growth in the Middle East is forecast to recover to +4% this year with significant infrastructure projects either underway or planned," he said.

Mr King believes growth of +10% each year for the next two years will make Qatar an attractive market while Saudi Arabia and Kuwait will also remain strong given their financial standing.


The Middle Eastern construction market continues to be led by a dynamic that sees developers asking how things can be done rather than dwelling on difficulties and problems. As Mr Yaw told iC, "The speed at which clients expect delivery is almost unrivalled. You are planning and designing a project one day and the next you're building it. There's a real pressure to deliver and it's this approach that has enabled the region to build the tallest building and construct the largest port.

"I have no doubt the big infrastructure projects such as the GCC railway will become reality too."

Latest News
Palfinger crawler crane chosen for power plant lift
Crane on site for lift at pumped storage power plant in Bergheim, Austria
Wheeled mobile crane installs 8.5MW wind turbine
First job for China’s 2,600 tonne capacity all terrain crane built by XCMG
New Chief Commercial Officer at Byrne
New CCO to support sustainable growth strategy