Clyde & Co supports International Women's Day and is committed to accelerating gender parity globally. In honour of the many exceptional women we work with every day, we have interviewed influential women from some of the most dynamic industries in the Middle East to discuss the trends, opportunities and challenges they are experiencing. In this video, Clarissa Ogden, General Counsel of Multiplex Middle East, shares her outlook on the construction industry with Matthew Heywood and discusses new investments, liquidity issues, and project delivery in the region.
Construction in the Middle East
The Middle East construction industry is one of the most dynamic and fast moving in the world and this comes with both great opportunity and great risk. Many in the market would agree that it has been a tough few years for contractors; however, there is renewed optimism with regard to the economic climate, which is now translating into increased activity in the construction market.
The stabilisation of the economy, economic diversification and increased investment spending is leading to new construction projects and opportunities for work across the region. An increase in government investment spend is likely to translate into an increase in private investment spend, which will support growth in the construction sector. Major infrastructure projects such as Expo 2020, Qatar World Cup, Vision 2030 and additional investment in energy and utilities projects will help propel the sector's growth as well.
The region remains sensitive to oil and gas prices and this is still affecting most of the Middle East countries, but it is clear that the regional economies are focused upon diversification away from a dependency on oil and gas. This will provide more stability and more sustainable investment into construction projects in the future.
In terms of sectors, experts expect energy, transport and social infrastructure to see the largest investment across the region over the coming years.
Market liquidity, regional talent & materials demand
The key challenge for the construction market is liquidity, with cash flow being the life blood of construction projects. Tightened budgets and the increased number of market entrants have had a downwards pressure on pricing. Cash flow and liquidity also had an impact on delivery of projects, particularly with the delays in payments and administration of claims and variations.
Another big challenge for the region is managing the skills shortage, particularly in the context of ever more elaborate designs and uses of new technology. However, skills shortages have always been an issue in the Middle East construction industry. This challenge is being compounded by the tightening of national laws related to migrant workers in various MENA jurisdictions, which has put increased pressure on the delivery of projects.
Finally, demand for materials remains a challenge across all jurisdictions, with public deadlines in 2020 and 2030 looming. The scale of projects in the Middle East is putting pressure on companies to source the needed resources in time to meet current deadlines.