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Al Mazaya Holding’s Weekly Report

GCC States Urged to Continue Infrastructure Development and Ensure a More Effective Role for the Private Sector to Improve Returns and National Economies

Infrastructure enterprises identified as main catalyst to all business platforms

Infrastructure enterprises are a major catalyst to accelerate economic, commercial and real estate growth in the region, with sustainability taking precedence over all other considerations in the developmental plans devised by GCC states.

In its weekly real estate report, Al Mazaya Holding said that the lion’s share of the region’s projects are infrastructure-oriented, primarily the construction of roads, airports, railways and power plants. It has transpired, according to the report, that the countries of the region are giving priority to high-yield projects over the medium and long terms.

Most of mega projects currently executed by countries of the region reflect their economic visions, most of which target the year 2030 as their completion date. In order to achieve their ambitious economic objectives, countries of the region have to have robust economies capable of generating equitable returns from different key economic platforms, including the Oil and Gas sector. They have to be capable of attracting sustainable foreign investments, steering clear of bubbles, speculations and fragile investments.

By laying more focus on infrastructure projects, GCC states seek to rehabilitate their economies and optimize their expenditure, endeavoring to reap the dividends of their investments by ensuring stable returns without government interventions and additional financial allocations in the future.

The report noted that Bahrain is presently witnessing an investment boom at the level of infrastructure projects, with the market having already survived all the pressures besetting it, achieving tangible growth at the real estate sector, locally, regionally and internationally. The report cited the ongoing construction of the USD $1 billion Bahrain International Airport as a perfect example for massive infrastructure projects ongoing in the kingdom. The airport is expected to have a capacity of 14 million travelers. The Alba’s Line 6 Expansion is another mega project estimated at USD $3 million. The Kingdom’s new power and gas plant are expected to effectively contribute to the growth of the non-oil sector in the country, said the report.

Current business indictors reflect the vibrancy of the UAE real estate market despite economic and financial pressures created by the fluctuations in global oil prices. The UAE is the top of MENA countries in terms of the volume of infrastructure enterprises, which are launched in alignment with the UAE government’s strategies to ensure investment momentum and vibrancy under all circumstances.

Infrastructure enterprises in the UAE are sustainability-based, with state departments consistently seeking to enforce sustainability and green building codes as well as renewable energy concepts through which the country’s future plans can be realized by applying best practices and optimal utilization of resources and human capital.

The report underlined the importance of infrastructure enterprises to ensure economic momentum by directing more attention to engage the private sector in the development process in a way that it turns to be a partner rather than a mere beneficiary.

The report termed the infrastructure enterprises in Qatar as the most diversified in the entire region, as it is associated with mega projects of tremendous international significance, including those of the FIFA World Cup 2022.

According to the report, the Qatari government is planning to give the private sector priority in executing existing projects, with statistics showing that the country’s 2017 budget earmarks more than QAR 72 billion to national projects has increased allocations to mega projects. The report noted that a total of QAR 261 billion is expected to be spent on FIF World Cup-related projects over the coming years, most of which target the transport, sports, electricity, education and health sectors.

Infrastructure enterprises have posted stable growth during Q1 2017 and have become the mainstay of economic, social and political activities in urban societies.

In conclusion, the report underlined the importance of the GCC states continuing to launch new infrastructure projcts over the coming few years, warning that any postponement or cancellation of existing projects will certainly create more challenges to the private sector. The GCC states are always urged to keep the investment momentum running and to encourage the private sector to play a more effective role in implementing the development plans by contributing to infrastructure projects and other enterprises that are mainly aimed to attract foreign investments, which mostly need a robust and vibrant private sector to persist.