The economic hit from COVID-19 saw construction output fall in the region. Qatar saw output slip by 4 percent and the UAE saw an estimated fall of almost 5 percent. Worst hit, Oman’s construction sector saw a double-digit drop in output.

On the ground, there is lukewarm sentiment across most of the region, with Saudi Arabia heating up, while Oman’s cold snap is expected to continue in at least the short term.

The rising cost of imported materials on which the Middle East’s construction sector relies heavily may prove a big barrier to shrugging off the current market malaise. It feeds into other major challenges seen in the region, such as market uncertainty and lack of confidence among investors. If this translates into lower activity, this in turn would add to the challenges of too many contractors chasing the available work.

Future outlook

Major social, economic and environmental transitions continue in the Middle East as it seeks to create a more sustainable future. Construction will play a key role in enabling these ambitions. But there are immediate challenges, not least those that flow from increasingly stretched resources within the global construction sector.

Progress of the environmental agenda

As a major oil-producing region, the Middle East is inevitably compromised on the environmental agenda. However, the region has huge potential for solar generation and the adoption of clean energy, with PV outputs potentially double those available in Europe. And the pace of installation has accelerated materially over the past few years.

Gulf States made various commitments under the Paris Agreement in 2015 to reduce carbon emissions with inconsistent performance seen across the region. In Qatar, emissions are down since 2015, as it made environmental commitments in its bid for the Word Cup. Conversely, in the UAE emissions are up since 2015, though it recently increased its commitment to make similar cuts by 2030.

Regional construction cost performance

Top three construction challenges