Construction output in the Middle East could recover in 2010, although the focus of the workload has shifted away from Dubai, according to a new survey published last week.
Boom and Recovery − Understanding the Middle East Construction Market, published by law firm Norton Rose, says that 55% of respondents working in the region’s construction industry expected the effects of the economic slump to fade within a year and that the sector would recover next year.
“Continued demand will mean that the construction sector will remain buoyant.”
Norton Rose report
“The continued demand for power, water, transport and key social infrastructure throughout the region will mean that the construction sector will remain buoyant,” says the report.
However, 71% of respondents said their primary markets were now Saudi Arabia, Abu Dhabi and Qatar with only 5% naming Dubai.
Infrastructure was seen to be one of the biggest areas where spending would aid recovery, with 35% of the firms surveyed by Norton Rose expecting transport to receive a big financial boost, 29% expecting the power sector to grow and 24% expecting a rise in water and sanitation spending.
Disputes a concern
The report says that construction disputes are still a major concern. Although 72% of contracts in the region provide for arbitration, none of the survey respondents said they used it.
Instead the 38% that said they were experiencing contractual disputes as a result of the financial crisis said they preferred to settle through informal negotiation. Most disputes − 60% − were put down to non-payment.
The study said few contractors were willing to damage their reputation by taking on an influential developer or client in arbitration or court proceedings.