gcc economic review and outlook for 2016 - · pdf filegcc economic review and outlook for ......

© 2013 MEED Insight

13 January 2016, Dubai

Presented by Ed James

Director of Content & Analysis, MEED Projects

[email protected]

@EdJamesMEED

GCC economic review and outlook for

2016

And the impact on the regional projects market


All the project information in this presentation

is sourced from MEED Projects

MEED Projects is a Middle East, North and East Africa project tracking platform. It has two

major functions; it is a business development tool to help you find new business

opportunities and an analysis tool so you can assess the feasibility of potential new markets

and projects.

5 key reasons to sign up for a demo:

• Identify new business opportunities from over 12,000 active projects worth over $7 trillion

• Improve performance in current markets and evaluate new markets with 23 countries covered

• Build the right company relationships using our database of over 11,200 companies on live projects

• Target over 20,000 key decision makers ahead of your competitors

• Forecast market developments by country and project type to inform your strategic planning


-

2

The GCC macroeconomic situation 1

3 Source: FT

Average oil price 2013-2015 ($ a barrel)

© 2014 MEED Projects

The oil price – the new paradigm


On 12 January, the Brent price fell 3% to just above $30 a barrel. It seems inevitable

that oil will fall below $30 for the first time in 12 years

4 © 2014 MEED Projects

Why?


Soaring non-OPEC production

Warm winter and high level of stocks and strategic reserves

Shale oil and gas producers proving harder than expected to eradicate

Prospect of Iranian crude flooding the market, Iraqi exports keep increasing

KSA showing no sign of relenting on its policy

Weakening global demand

Ultimate objective:

To reaffirm the key role of low-cost oil producing GCC nations in the

global economy and maintain market share

5 © 2014 MEED Projects © 2014 MEED Projects Source: IEA

The result – major deficits

145.8

137.2 132.6 130.2 129.7

113.2 109.4

73.6 65.3 62.8

0

20

40

60

80

100

120

140

160

180

200

Libya Iran Algeria Bahrain Iraq Oman SaudiArabia

UAE Qatar Kuwait

$ price barrel budgets are based on

2014 2015


After the oil price drop – a hefty fall in GDP


• Falling oil prices and regional conflicts slowing growth and raising deficits

• Mena oil exporters are expected to lose $360bn in oil revenue in 2015

• GCC GDP growth to slow to 3.2% for 2015 from 3.4% in 2014. 2.7% in 2016

• Fiscal and current account balances deteriorating sharply

• GCC to run deficit of 13.2% GDP, Saudi’s fiscal deficit 21.6%

• Financial buffers mitigate need for sudden adjustment in fiscal policy but long

term reforms such as the removal of subsidies and the introduction of new

taxes will have to be introduced if oil prices remain low

“Many countries have built up buffers, and have started to

consolidate their fiscal position but fiscal deficits, averaging

almost 13 per cent for Mena oil exporters, are likely to persist

for years. Sizeable, sustainable fiscal consolidation is needed.”

Masood Ahmed, Director, Middle East and Central Asia, IMF, 21 Oct 2015

7 Source: MEED;

• Fall in revenues put pressure on governments to make savings.

• IMF forecast deficit of about 13.5% of GDP in 2015

• Policy options limited:

• Oil production already running close to full capacity

• Non-oil revenues through taxation unpalatable

• Spending cuts as the main option

• Primary focus on capital spending, which is more than 10% of GDP

• Public sector wages are protected

• Some governments looking at fuel subsidy cuts

• Slowdown in the rate of hiring in the public sector

• 2016 budgets will provide indication of policy direction


So tough decisions ahead


8 Source: MEED Projects; *Kuwait budget runs April-March

Budgeted expenditures comparison 2014-16 ($bn)


Budgeted expenditures largely stable


227

30.9

13.2

64.8

12.6

54.7

0

50

100

150

200

250

Saudi Arabia Oman UAE Kuwait* Dubai Qatar

2014

2015

2016

9

Regional Growth Drivers & Barriers to Growth

Negative factors

Positive factors

Strong government

fiscal reserves and

stable budgets

Localised

issues/World Cup

and Expo

Demographic

Growth

Political

Commitment to

Invest in Domestic

Infrastructure 2 3

1 4

Reluctance of

Clients to Push

Ahead with Projects

Wider economic

impact i.e. on real

estate

Political & Social

Instability Collapsing revenues

2 3

1 4


Positive and negative factors


© 2013 MEED Insight 10

Projects market 2


Market Analysis by Country

© 2014 MEED Projects © 2012 MEED Insight

Value of GCC contract awards by country, 2008-14

Source: MEED Projects

2229

25355

14829

29695

41989

56453

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Bahrain Kuwait Oman Qatar Saudi Arabia UAE

2008

2009

2010

2011

2012

2013

2014

Market Analysis by Sector

12

Value of GCC Contracts Awarded by Sector, 2008 – 2014 ($m)

Source: MEED Projects © 2014 MEED Projects

2008

2009

2010

2011

2012

2013

2014

1845

68896

5716 4311

28290

18209

36021

7262

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Chemical Construction Gas Industrial Oil Power Transport Water

$m

1.5

27.4

13.7

28.9

59.0

42.5

172.9

0

20

40

60

80

100

120

140

160

180

200

Bahrain Kuwait Oman Qatar Saudi Arabia UAE GCC

Pro

jec

t a

ward

s (

$b

n)

MEED Forecast for GCC Contract Awards, 2015 ($bn)

Source: MEED Projects. Note: forecast is made based on hard data analysis of project pipeline in each country

GCC Projects Market:

January 2015 forecast

1.5

27.4

13.7

28.9

59.0

42.5

172.9

3.2

31.5

13.6

29.3

49.8

37.4

164.8

0

20

40

60

80

100

120

140

160

180

200

Bahrain Kuwait Oman Qatar Saudi Arabia UAE GCC

Pro

jec

t a

ward

s (

$b

n)

2015 Forecast 2015 Act

MEED Forecast for GCC Contract Awards vs. actual, 2015 ($bn)



2015 market performance vs. January 2015 forecast

MEED Forecast for GCC Contract Awards, 2016 ($m)


2016 contract award forecast

2,810

24,363

13,451

22,253

40,761

36,513

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000


Pro

ject

aw

ard

s (

$m

)

Total = $140bn


Dubai

16

Value of Contracts Awarded in Dubai, 2005 – 2015 ($m)


0

5,000

10,000

15,000

20,000

25,000

30,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Pro

ject

aw

ard

s (

$m

)

Dubai vs. Abu Dhabi

17

Value of GCC Contracts Awarded Abu Dhabi and Dubai, 2006 – 2014 ($m)


0

10,000

20,000

30,000

40,000

50,000

60,000

2006 2007 2008 2009 2010 2011 2012 2013 2014

$m

Emirate of Abu Dhabi Emirate of Dubai


Top clients and contractors 3

Contractor & Client Analysis:

Top Dubai Contractors

19 Source: MEED Projects


Top Dubai contractors Based on Work Under Execution


Top Dubai MEP Contractors



Top Dubai MEP contractors Based on main contract value of project under execution


Top Dubai consultants


Top 10 Dubai civils consultants based on Work Under Execution



Top Dubai clients


Top 10 Dubai clients based on Work Under Execution



Top Future Clients


Top 10 Dubai Clients Based on Work Planned



The Future 4

Forecast:

Projects Pipeline - GCC

25

Budget Value of Planned & Un-awarded Projects by GCC Country ($bn)


Forecast:

Construction Projects Pipeline - GCC


Budget Value of Planned & Unawarded GCC Construction Projects ($m)


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000


Forecast:

Projects Pipeline – Dubai construction


Budget Value of Planned & Un-awarded Dubai construction projects by subsector($m)


Apartments, 9,006, 9%

Government Facility, 271, 0%

Hospital, Clinic, 655, 1%

Hotel, Resort, 10,546, 11%

Houses, Villas, 8081, 8%

Mall, Market, 3,932, 4%

Mixed-Use, 61,238, 63%

Museum, Library, 298, 1%

Offices, 1,882, 2%

Theme Park, 1,180, 1%

University, School, 273, 0%


Future Dubai projects 5

Expo 2020 – main contracts


Project Value ($m) Expo 2020 Bureau - Expo 2020 Development : Expo Centre 135

Expo 2020 Bureau - Expo 2020 : Empathy Pavilion 10

Expo 2020 Bureau - Expo 2020 : UAE National Pavilion (MASDAR) 10

Expo 2020 Bureau - Expo 2020 Development : Central Command Centre 50

Expo 2020 Bureau - Expo 2020 Development : Data Centers 30

Expo 2020 Bureau - Expo 2020 Development : Exhibition Centre 50

Expo 2020 Bureau - Expo 2020 Development : Expo and Water Arenas 50

Expo 2020 Bureau - Expo 2020 Development : Expo Souk 50

Expo 2020 Bureau - Expo 2020 Development : Expo Village 250

Expo 2020 Bureau - Expo 2020 Development : Expo Village (Infrastructure

Package) 50

Expo 2020 Bureau - Expo 2020 Development : Fire,Emergency &

Ambulance Station 50

Expo 2020 Bureau - Expo 2020 Development : Serviced Apartments 130

Expo 2020 Bureau - Expo 2020 Development : Special & Theme Pavilions 50

Expo 2020 Bureau - Expo 2020 Development : Staff Housing 200

Expo 2020 Bureau - Expo 2020 Development : Theatre 100

Expo 2020 Bureau - Expo 2020 Development :Amenities 175

Expo 2020 Bureau- Expo 2020 Development : Expo Mall 135

Expo 2020 Bureau- Expo 2020 Development : Utilities & Infrastructure

Development 1,000

Source: MEED Projects

Red Line extension

© 2014 MEED Projects Source: MEED Projects

Bids to be submitted in 17

January

*SsangYong / Trojan General

Contracting / Construcciones y

Auxiliar de Ferrocarriles / Tristar

*Mapa / China Railway

Engineering Corporation / CNR-

CSR (CRRC)

*Acciona / Gulermak / Alstom

*Obayashi / Wade Adams /

Brookfield Multiplex / Mitsubishi

Heavy Industries / Atkins

*Orascom / Yapi Merkezi / GS

E&C / Siemens / CH2M Hill

*Salini Impregilo /

Construcciones y Auxiliar de

Ferrocarriles

*Nurol / Astaldi / Construcciones

y Auxiliar de Ferrocarriles

*HLG / Deutsche Bahn /

Hochtief / Hyundai Rotem

Dubai South


AMIA

Al Maktoum International Airport Phases 1 and 2


Phase I

Runways

3 parallel Code F, CAT III B, 4.5 Km

each (2 New+1 existing) with a

capability of simultaneous operation

Terminals

West terminal

165,000 sqm footprint

35 million passengers annually

Satellite

Concourses

2 Satellite Concourses

385,000 sqm footprint each

65 million passengers annual capacity

per concourse

Total capacity of over 120 million

passenger

200 wide-body aircraft contact stands

100 stands each for Code E and Code

F aircraft

Walking

Distance Maximum 400m within each concourse

Train Link

between

Terminals &

Concourses

Total 6, (2 tracks each for departure,

arrivals and transfers)

3 stations at each concourse

Total 7 stations (6 at the concourses, 1

at the West Terminal)

Express train

(Dubai Metro)

Reaching the West terminal from the

city

Metro Line Red Line extension and Purple Line

Final Phase

Runways

5 parallel Code F, CAT III B, each 4.5 Km (2

New + 3 existing) capable of simultaneous

operation

Terminals West Terminal with annual capacity of 35

million passengers

East Terminal with annual capacity of 15

million passengers

Satellite

Concourses

4 satellite Concourses

65 million passengers per annum per

Concourse

Total annual capacity of 260 million

passengers

400 wide body aircraft contact stands

200 stands each for Code E and Code F

aircraft

Train Link

between

Terminals &

Concourses

6 Trains – 2 tracks each for Departures,

Arrival and Transfers

3 stations at each Concourse

Total 14 stations (12 at the Concourses, 1 at

the West Terminal and 1 at the East

Terminal)

Cargo 16 million Tonnes per Annum

Support

Facilities Over 1,500,000 sqm

Top awarded Dubai projects 2015 – a slow year

33

Top 15 Dubai individual projects awarded 2015


Project Industry Budget ($m) DEWA - Hassyan Coal Fired IPP Phase 1 Power 1,800

ICD - Palm Jumeirah: Royal Atlantis Resort & Residences, Phase 2 Construction 840

DEWA - Jebel Ali M Station Expansion Power 400

Nakheel - Palm Jumeirah: The Palm Gateway (Tender No. DMS 141324) Construction 380

Meraas Holding - Bluewaters Island : Venu Hotel Construction 381

Meraas Holding - Bluewaters Island : Residential Buildings Construction 350

Shuaa Energy 1 - Mohammad Bin Rashid Al Maktoum PV Solar Plant (IPP)

- Phase 2 Power 327

Nakheel - Deira Island : Night Souk and Board Walk (Tender No. DMS

141103) Construction 319

Unilever - DIC : Manufacturing Plant in Dubai Industrial City Industrial 273

I&M Galadari Group - City of Arabia : Avenue 353 Construction 270

Royal International - Rosemont Hotel & Serviced Apartments Construction 270

Meraas Holdings - La Mer Construction 240

Emaar Properties - The Hills Construction 230

Nakheel - Residential Development at Nad Al Sheba Third: Package 1 Construction 226

Nakheel - Palm Jumeirah: The Palm Tower (Tender No. DMS 140243) Construction 223

Union Properties - DIP - Green Community: Phase 3 Construction 222

Al Habtoor Group - St. Regis Polo Resort and Club Construction 220

Top 2016 projects

34

Top 15 Dubai individual projects due to be awarded 2016


Project Industry Budget ($m)

DAEP - AMIA Expansion : Phase 2 (Phase 1) : Concourse Building Transport 9,000

Dubai Municipality - Desert Rose Construction 8,067

Dubai Municipality - Al Mamzar Beach Development Construction 2,722

Meydan - Meydan City : Meydan Horizon Construction 2,000

DAEP - AMIA Expansion : Phase 2 (Phase 1) Transport 1,714

Benaa Developments - Dubailand: Golf City Construction 1,392

Dubai RTA - Dubai Metro: Red Line Extension (Route 2020) Transport 1,300

TECOM Investments - Innovation Hub Construction 1,200

RP Global Developers - Business Bay : RP One Construction 1,100

DMCC - Burj 2020 District Construction 1,000

ENOC - Jebel Ali Refinery Expansion Oil 1,000

Expo 2020 Bureau- Expo 2020 Development : Utilities & Infrastructure

Development Transport 1,000

Dubai Municipality - Strategic Sewerage Tunnel Deira : Bur Dubai Water 1,000

DWTC - Mixed-Use Development Construction 1,000

Top 2016 projects part 2

35

Top 16-30 Dubai individual projects due to be awarded 2016


Project Industry Budget ($m) Worldcare Wellness - Dubai Healthcare City (Phase 2): Worldcare Wellness

Resort Construction 1,000

Nakheel Corporation - Deira Island : Deira Mall (Tender no. DMS 145117) Construction 900

ICD - One Zaabeel Construction 817

DEWA - Mohammad Bin Rashid Al Maktoum Solar Power Plant (IPP) -

Phase 3 Power 800

G&Co - Meydan City : The Fields Construction 762

Dubai Municipality - Jebel Ali Drainage Tunnel : Package 2 Water 700

DIRC - Mirdiff Hills Construction 680

Deyaar - Midtown Project Construction 642

Dubai Municipality - Al-Warsan Waste-to-Energy Plant Power 600

Dubai Holding - Design District: Phase 2 Construction 550

Dubai Municipality - Strategic Sewerage Tunnel : Deira Water 500

DEWA - Jebel Ali K Power Station : Phase III Power 500

Dubai Municipality - Jebel Ali Drainage Tunnel: Package 4 Transport 500

Nakheel - Ibn Battuta Mall Expansion : Phase 3 Construction 450


Abu Dhabi 6

Top awarded Abu Dhabi projects 2015 – a slow year

37

Top 15 Abu Dhabi individual projects awarded 2015


Project Industry Budget ($m)

GASCO - IGD Expansion: Ras Al Qila to Habshan Onshore Pipeline

(Package 3) Gas 700

Al Rayan Investment - Moon Flower Complex Construction 550

ADGAS - IGD Expansion: Gas Treatment Plant: High Pressure (Package 1) Gas 491

Farah Leisure Parks Management - Yas Island : Warner Brothers Theme

Park Construction 435

Aldar Sorouh Properties - Yas Island: Ansam Development (Phase 1) Construction 430

Gulf Related - Maryah Central: Retail Mall (Phase 1) Construction 425

GASCO - IGD Expansion: Das Island to Habshan Offshore Pipeline

(Package 2) Gas 410

NFPC - Food Production Facility at Kizad Industrial 408

Aldar Sorouh Properties - Al Raha Beach Development: Al Hadeel (Al

Bandar) Construction 368

Musanada - Mafraq-Ghuweifat Road Development: Section 3B Transport 340

Musanada - Mafraq-Ghuweifat Road Development: Section 3A Transport 340

ADCO - Mender Full Field Development: Phase 1 Oil 330

ADOC - Surface Facilities of Hail Field Development For Projection Scheme Oil 310

Al Reyadah - CO2 Pipeline Network - Phase II Gas 300

Al Gharbia Pipe Company - Kizad: Steel Pipe Manufacturing Facility Industrial 280

A slow year

38

A real slow down in activity outside the oil and gas sector

What has happened to the Saadiyat cultural district and the museums?

Relocation of Sheikh Zayed Port?

Metro and LRT?

Tacaamol?

However,

Musanada active especially in social housing and infrastructure

Oil and gas still strategic sector

May be made clearer after review of 2030 vision



Construction Costs 7

40

Tender Price Index

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

0

20

40

60

80

100

120

140

160

180

200

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019

Tender Price Index Per Cent Change YoY

41

Contractor Cost Index

0

20

40

60

80

100

120

140

Labour Equipment Diesel Material

42

Contractor Cost Index – Concrete, Cement, Rebar

0

20

40

60

80

100

120

Cement Concrete Rebar

© 2013 MEED Insight © 2014 MEED Projects

13 January 2016, Dubai

Presented by Ed James

Director of Analysis, MEED Projects

[email protected]

@EdJamesMEED

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