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Mazaya Monthly Real Estate Report -
Week 1 - February 2017
The construction-contracting sector now
sees a slow down in new projects due
to the scourge of late payments by both
the government and private developers.
This makes it clear that the diversification
of projects in terms of volume and
time frames is not the only factor that
directly impacts the performance
of
local
contracting
companies.
A stable banking sector plays a major
role in ensuring successful real
estate investments, said the report,
underlining the benefits secured from
the developers’ timely fulfilment of their
financial obligations. The report cited
the state of optimism created by the
Saudi real estate sector’s payment of
outstanding dues estimated at SAR 80
billion to contracting companies, a move
that has boosted economic activity,
helped launch feasible projects, and
limit the number of foreign companies
defaulting and exiting local markets.
In 2016, the Saudi construction-
contracting sector dropped projects
worth around $266 billion, most of
which are heavy investments that are
not expected to yield commensurate
returns. The report stated that
continued austerity measures and
restructuring plans in KSA, including
efforts to cut budget deficit to SAR
198 billion, will have adverse direct
effect on the construction-contracting
sector this year, with infrastructure
projects to take the lead instead.
In the meantime, the UAE realty market
continues to deliver positive results,
especially with the growing number of
new projects being launched. Recent
data revealed that the total spending
on construction projects in Dubai shall
amount to AED 100 billion in 2017 thanks
to the fact that the contracting sector has
hitherto fulfilledall itsfinancial obligations.
In Qatar, more contracts are expected to
be signed to launch new projects worth
QAR 46 billion during 2017, thanks to
the considerable budget allocations
to mega infrastructure, healthcare,
education
and
transportation
projects. The report referred to
the Qatari government’s economic
diversification plan aimed at keeping
the competitiveness of the contracting
sector and its ability to attract
investments and laborers until 2020.