GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
GCC Building Construction and Interiors Overview June 2013
www.indexexhibition.com P a g e : 1 www.ventures-me.com
www.ventures-me.com / www.workspace-index.com GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Table of Contents GCC Building Construction and Interiors Overview June 2013 ...... 1
Introduction ...... 5
Chapter 1 ...... 17
GCC Commercial Real Estate Market ...... 17
Interiors Contracting and Fit Outs in Commercial Sector Developments ...... 21
Chapter 2 ...... 27
GCC Hospitality Sector ...... 27
Hotel Interiors Contracting and Fit-outs Sector ...... 32
Chapter 3 ...... 37
GCC Residential Development Sector Overview ...... 37
Residential Sector Interiors Contracting and Fit-Out Sector ...... 42
Chapter 4 GCC Retail Development Sector Overview ...... 46
Retail Development Interiors Contracting and Fit-Out Sector ...... 50
Chapter 5 ...... 53
GCC Medical Development Sector Overview ...... 53
Healthcare Development Interiors Contracting and Fit-Out Sector ...... 56
Chapter 6 ...... 60
GCC Educational Development Sector Overview ...... 60
Educational Development Interiors Contracting and Fit-Out Sector ...... 62
Conclusion ...... 66
List of Figures Figure 1: GCC Building Construction Projects completion (US$ Million), June 2013 ...... 7 Figure 2: GCC Interior Contracting and Fit-outs Spend (US$ Million), 2012 and 2013...... 10
www.workspace-index.com P a g e : 2 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 3: GCC Interior and Fit outs Spend, Growth versus Share by Country, June 2013 ...... 12 Figure 4 GCC Interior and Fit outs spend, Growth versus Share by Sector, June 2013 ...... 14 Figure 5: GCC Commercial Sector Projects Completed or Expected to be Completed Split by Countries (US$ Million), 2012-2013 ...... 19 Figure 6: GCC Commercial Interiors and Fit out Spend by Country (US$ Million), 2012-2013 ...... 22 Figure 7: GCC Hotel Project Completions in 2012 and Expected to be Completed in 2013 (US$ Million), 2012-2013 ...... 29 Figure 8: GCC Hotel Interior Contracting and Fit out Spend (US$ Million), 2012-2013 ...... 33 Figure 9: GCC Residential Project Completions in 2012 and Due for Completion in 2013 (US$ Million), 2012 – 2013 ...... 39 Figure 10: Residential Sector Interiors Contracting and Fit out Spend (US$ Million), 2012-2013 ...... 42 Figure 11: Retail Construction Projects with Completion in 2012 and 2013 (US$ Million), 2012-2013 ...... 49 Figure 12: GCC Retail Interiors Contracting and Fit-out Spend (US$ Million), 2012-2013 ...... 50 Figure 13: GCC Healthcare Projects with Completion in 2012 and 2013 by Country, (US$ Million) .... 55 Figure 14: GCC Healthcare Sector Interiors and Fit out Spend (US$ Million) by Country, 2012 - 2013 ...... 56 Figure 15: GCC Educational Projects with Completion in 2012 and 2013 by Country, (US$ Million) .. 61 Figure 16 GCC Educational Interiors and Fit out Spend (US$ Million) by Country, 2012-2013 ...... 63
List of Tables Table 1: Major GCC wide Commercial Building Project Completions in 2012 by Project Value (US$ Million) ...... 24 Table 2: Major GCC wide Commercial Building Projects Due for Completion in 2013 by Project Value (US$ Million) ...... 24 Table 3: Major GCC wide Hotel Project Completions in 2012 by Project Value (US$ Million) ...... 34 Table 4: Major GCC wide Hotel Projects Slated for Completion in 2013 by Project Value (US$ Million) ...... 35
www.workspace-index.com P a g e : 3 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Table 5: Major GCC wide Residential Sector Project Completions by Project Value (US$ Million), 2012 ...... 43 Table 6: Major GCC Residential Sector Projects Due for Completion in 2013 by Project Value (US$ Million) ...... 44 Table 7: Major GCC wide Retail Projects with completion in 2012 by Project Value (US$ Million) ..... 51 Table 8: Major GCC wide Retail Projects Due for Completion in 2013 by Project Value (US$ Million) 51 Table 9: Major GCC wide Hospital Project Completions in 2012 by Project Value (US$ Million) ...... 57 Table 10: Major GCC wide Hospital Projects Due for Completion in 2013 by Project Value (US$ Million) ...... 58 Table 11: Major GCC wide Educational Project Completions in 2012 by Project Value (US$ Million) . 64 Table 12: Major GCC wide Educational Sector Projects Due for Completion in 2013 by Project Value (US$ Million) ...... 65
www.workspace-index.com P a g e : 4 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Introduction
With GCC real estate markets making steady recovery from the after effects of the global economic slowdown and the Arab Spring in 2012 and into 2013, the first quarter witnessed a flurry of activity driven by vast budgetary allocations and government spending on economic development across sectors such as healthcare, education, social housing and infrastructure, that in turn revived private activity in the real estate sectors of the economies across the GCC.
Qatar, Saudi Arabia and the UAE have led the revival with the governments investing vast sums and announcing unparalleled budgetary outlays for overall development of the economy and its infrastructure as a part of their visions to diversify from excessive dependence on hydrocarbons to fuel their development. Tourism and hospitality sectors have sharply increased with the GCC being perceived as a safe haven for travel and investment amid the global economic slowdown and the regional upheaval in the other pockets of the Middle East.
Though countries such as Kuwait and Bahrain, lag behind in the overall recovery process due to greater political upheaval in these countries and lack of consensus in investment decisions in Kuwait, though gradually order is being restored and Bahrain has witnessed a spurt in projects and investments in the real estate sector in 2013 and Kuwait a resumption of its developmental plans which had been put on hold amid the Arab Spring and its prolonged impact thereafter.
Building projects worth over US$ 60 billion are scheduled to be awarded to contractors in 2013 across all the building sectors including residential, commercial, hospitality and retail after a brief decline in 2012 to US$ 44.5 billion, as a number of projects earlier resumed after the slowdown neared completion and oversupply was tackled with a more cautious approach to fresh contract awards until normalcy was gradually restored. Oman has continued to emerge as a rising star albeit on a smaller scale as compared to Qatar, UAE and Saudi Arabia by virtue of its smaller size, though indicators point to sustained growth due to the vast developmental efforts of the Oman government to promote the Sultanate as a tourist hub while taking advantage of the connectivity and proximity to other countries in the GCC such as Qatar that are riding the developmental wave.
www.workspace-index.com P a g e : 5 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Though revival has been strong across segment of the real estate market, the commercial sector across the GCC continues to face the effects of oversupply plaguing the region that is not helped by a continuing addition to the supply of commercial office space in the first quarter of 2013 making it the second largest sector in terms of project completions in 2013 after the residential sector. However, the trend of acquiring properties cheap and remodelling it for better management of available rentable space and adding value to the market has caught on, providing a large window of opportunities for the renovation and refurbishment market for interiors amid stringent and shrinking budgets among global investors wanting to invest in the region.
Countries such as Saudi Arabia have attracted international acclaim for undertaking the world’s largest investments across building up of its educational sector and upgrading healthcare facilities, also pointing to the massive opportunity for the interiors and fit out markets that lies in these segments.
Though GCC has already been a favourite with retail investors owing to the large disposable incomes and growing population of these economies, UAE, Oman, Kuwait and Saudi Arabia have also emerged as retail destinations in 2012, making it to consulting firm AT Kearney’s list of top global retail markets for 2012, with UAE ranking seventh, Oman tenth, Kuwait twelfth and Saudi Arabia fourteenth. UAE moved up from its previous year ranking of 8th on the back of strong retail sales and renewed consumer confidence and the country’s retail malls enjoyed their best performance in over a decade. Oman and Kuwait are the new entrants in the list on the back of their fresh retail developments and as a new and growing, attractive destination for luxury and speciality retailers, although small in terms of size with a greater interest of international brands in these emerging markets. Kuwait’s Avenue Mall sported the largest number of international brands in the country with two new malls also in its pipeline.
As per project schedules on 24th June 2013, Building projects worth over US$ 61.1 billion were completed in 2012 within all the building sectors including Residential, Commercial, Hospitality, Retail sectors, Medical, Educational sectors and Mixed Use and is likely to reach US$ 80.1 billion in
www.workspace-index.com P a g e : 6 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
2013 thus posting a robust growth of 31 percent year on year, with a greater upward revision from estimates in the previous quarter as larger projects were awarded and completed in the last quarter of 2012 and are likely to be completed in 2013 as of June 2013. Figure 1 provides the sector wise split of the building construction projects completed and expected completion in GCC as of 24st June 2013.
Figure 1: GCC Building Construction Projects completion (US$ Million), June 2013
35,000 GCC Building Projects Completed in 2012 and Due for Completion in 2013- Split by Sector (US$ Million), March 2013
30,000 2012 2013
25,000
20,000
15,000
10,000 ProjectsMillion)Completed/Due (US$ Completionfor
5,000
- Others Commercial Hotel Residential Shopping Centre Hospitals Educational Buildings Facilities
Source: Ventures Onsite MENA Projects Database (www.venturesonsite.com) Strongest growth continues to happen across the residential segment, boosted by the spread out effects of government spending on social infrastructure such as affordable housing programmes through 2011 and 2012 to counteract any ill effects of the Arab Spring on the GCC countries akin to its neighbours. Continuing from developmental momentum of 2012, the residential segment in 2013 continued its strong growth across pure residential and mixed use projects backed by increased
www.workspace-index.com P a g e : 7 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
budgetary allocations and strong liquidity funding housing development. The mid to high segments too have benefited from the growth in the residential markets across key areas of the GCC countries. Countries such as Saudi Arabia, Kuwait and Bahrain have heavily emphasised affordable housing allocating huge portions of their budget to ensure the gap between the demand and the supply due to mismatches arising from affordability eased in 2012 and across the first quarter of 2013 on the one hand while the market for villas and mid to high end residential developments across Qatar and UAE have found a decisive upward trend aided by the strong economic growth and the increasing population with large disposable incomes continuing to drive growth. Though economic growth has levelled off in these countries to a more sedate pace as compared to the large spurt witnessed in Qatar in 2012, the after effects of the budgetary push that continues to be made by all GCC governments is clearly translating into sustained growth across the real estate markets of the GCC.
Moreover, in the UAE government measures such as housing allowances and new leasing laws precluding sharing of accommodation are further likely to boost demand for residential accommodations. More projects are likely to come on board in 2013, with the market gradually gaining lost momentum. Moreover, the UAE has recently made a conscious effort to emulate the Qatar model of growth by organizing world renowned events, thereby bidding to host the World Expo 2020 in Dubai with the aim of attracting visitors and collaborators worldwide and boost domestic construction, tourism and industry in the bargain. If Dubai wins the bid to host the event, the surrounding activity is expected to provide a fillip to its construction industry on a parallel to that gained by Qatar in hosting the World Cup 2022 event.
Saudi Arabia has begun to focus on education and skill building to man its developmental efforts and substitute domestic labour for the currently used highly expensive expatriate labour force, on a scale not matched elsewhere in the world. Social infrastructure spending has also been concentrated across the healthcare sector with the third largest share in the market along with hospitality as international hotel chains such as Rotana, begin to perceive the region as a safe haven for tourists and investors alike and anticipate its healthy growth in tourism in the near future to
www.workspace-index.com P a g e : 8 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
expand including unexpected markets such as Bahrain where hotels and hospitality sectors have made a strong comeback in 2012 and continue to do so into 2013.
As the Interiors contracting and fit outs market closely follows the movements of the building construction markets owing to primary demand stemming from new contracts for interiors and fit outs from construction apart from the refurbishment market that clearly emerged as a strong trend amid tighter budgets among global investors in 2011 and 2012 to include ideas such as better space management and flexibility, environment and sustainability in design of buildings and open plan layouts that were gaining ground. Though new projects grew at a lukewarm pace over 2012 overall, the first quarter of 2013 promised a more optimistic turn in the residential, education and hospitality segments offered clear-cut opportunities on an ever increasing scale, with even the oversupplied commercial sector witnessing large project completions.
The GCC interior contracting and fit outs sector encompassing internal wood works, soft and hard furnishings, lightings, partitions, flooring, kitchens, bathroom fittings etc constitutes approximately 10 to 20 percent of the average construction project value, performing much better than its European and Asian counterparts. Worldwide market slowdowns have prompted investors to seek markets that offer growth prospects in the near term and GCC with its adaptive shift offers ample growth prospects for the interiors and fit outs market as existing structures are managed to suit the tighter pockets of the clients and landlords wanting to let out in an oversupplied market. As of March 2013, the GCC market for interior contracting and fit outs based on the estimated size of project completed in 2012 was estimated at US$ 7.2 billion. Growth in this highly adaptive market is set to reach US$ 9.2 billion by 2013 from the projects likely to be completed over 2013.
Figure 2 provides the GCC Interior decoration and fit outs spend by sector for the years 2012 and 2013.
www.workspace-index.com P a g e : 9 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 2: GCC Interior Contracting and Fit-outs Spend (US$ Million), 2012 and 2013
3,500 GCC Interior and Fit Outs Market Spend by Buildings Sector (US$ Million), 2012-2013
2012 2013 3,000
2,500
2,000
1,500 InteriorSpendMillion) (US$
1,000
500
- Commercial Hotels Residential Retail Others Hospitals Education Buildings
Source: Ventures Onsite MENA Projects Database (www.venturesonsite.com) As of June 2013, interior and fit outs spend in residential sector projects estimated at US$ 3.3 billion, occupies the largest share of 41 percent of the GCC interiors and fit outs market for 2012. However, though the increasing trend is likely to continue into 2013, the share of the residential sector is likely to gradually reduce as the initial heavy investment by the government affordable housing program peters out, but continue to maintain the highest share of the market given the strong growth in population, a large proportion of which is expatriate and the constantly growing demand for residences as is clear from the activity across the segments by the end of June 2013 as compared to the last quarter of 2012 and early 2013.
In second place, fast gaining shares at 19 percent as of 2012, the hospitality segment witnessed steady growth in 2012, largely in the last quarter of 2012, as important projects and components
www.workspace-index.com P a g e : 10 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
such as the completions in Doha Festival City, the opening of the Waldorf Astoria in Ras al Khaimah, the Marriott Marquis hotel, the tallest hotel in the world, four star Ocean View Hotel, two Rotana hotels, the Fairmont and The Palm came on board in 2012, and the sector received heavy emphasis from the governments of Saudi Arabia, UAE, Qatar, Bahrain and Oman as tourism became the main revenue generating focus of the GCC economies. Moreover, with many airport expansions to accommodate global travellers and make GCC countries a hub for travel stops, hospitality continues to present a growing opportunity for the interiors and fit outs sector into 2013.
Another important development for the interiors and fit outs market was in the field of education and healthcare. This segment has gradually increased in importance constituting greater shares each years in the GCC budgets since 2011, and has begun to reap results translating into growth with more educational and hospital projects near completion in 2012 and 2013. This is likely to cause the education and hospitals segments to gain shares in 2013 in the building interiors and fit outs pie gradually to 8 percent and 5 percent, respectively as compared to 4 percent and 2 percent, respectively in 2012, though the momentum of the initial spurt in investments is likely to peter out gradually in subsequent quarters of 2013.
UAE and Saudi Arabia remained the largest markets in the GCC interiors and fit outs market with Saudi Arabia shooting ahead in the last quarter of 2012, with a share of 38 percent as against the erstwhile leader the UAE with a share of 36 percent of the market as larger projects neared completion by the last quarter of 2012 and as of June 2013 a number of projects scheduled for completion in the first quarter along with the effects of the heavy government spending continued the momentum in these economies.
Figure 3 provides a comparative analysis of the largest versus fastest growing countries with regards to the interior and fit out spend as of June 2013.
www.workspace-index.com P a g e : 11 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 3: GCC Interior and Fit outs Spend, Growth versus Share by Country, June 2013
GCC Country Wise Interiors and Fit Outs Market Growth-Share (%), June 2013 250%
200%
Oman
150%
100% Saudi Arabia
Growth(%) 50% Qatar
Kuwait 0% UAE -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Bahrain
-50%
-100% Share (%)
Source: Ventures Onsite MENA Projects Database (www.venturesonsite.com) Growth in the UAE market has remained abysmally low and uneven till the end of 2012 as project delays and tightened purse strings weighed down by low prices and rents resulted in a protracted growth for the interiors and fit outs market. Moreover, while Dubai has made a strong revival, Abu Dhabi continues to revive at a slower pace along with the Northern Emirates, pulling down the overall growth prospects of the UAE as a whole. However, large number of project completions continue to make it the second largest market in 2012 and early 2013. The leader continues to be Saudi Arabia however, with the sustained benefits of its huge fiscal stimulus, inherently strong demand and unrestrained growth, in spite of the global economic slowdown. Bahrain is the other market, where in spite of government efforts, the aftermath of the political unrest has taken a
www.workspace-index.com P a g e : 12 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
heavy toll on growth in 2012 in the interiors and fit outs sector making it the smallest market both in terms of growth and size in early 2013 as well.
Oman continue to shine as the new rising star in 2013 with a growing share of the construction pie at 5 percent, promising a small, but a extremely rapid growth across the market for interiors and fit outs as the government flags off its vision to make the country a global tourist hub and investments made systematically to promote Oman’s tourism translate into greater building construction across its hospitality commercial and retail segments, especially in the speciality and luxury segments.
Qatar too is emerging out of its initial sluggishness originating in its oversupplied commercial sector to project strong growth in its interiors and fit outs sector into 2013 of 16 percent, as the vast government investment across 2011 and 2012 toward the hosting of the World Cup 2022 event, near completion in 2012 and 2013 with infrastructure, hospitality and residential segments assuming priority.
Kuwait too had begun to show strong signs of strong recovery in the last quarter of 2012 across its real estate markets, with large number of residential projects under its National Development programme among other sectors such as hospitality and education growing translating into a growth of 16 percent across its interiors and fit outs market in 2013 , though the uncertainty and the lack of political consensus in the parliament has caused some upheaval in the first quarter of 2013 slowing things down for the construction projects market that may continue into 2013.
Figure 4 provides a comparative analysis of the largest versus fastest growing sectors with regards to the interior and fit out spend as of June 2013.
www.workspace-index.com P a g e : 13 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 4 GCC Interior and Fit outs spend, Growth versus Share by Sector, June 2013
300% GCC Interiors and Fit Outs Market Growth Versus Share (%) by Sector, June 2013
250%
Hospitals
200%
Education
150%
Growth(%) 100%
50% Commercial Buildings Hotels
Others Retail Residential 0% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
-50% Share (%)
Source: Ventures Onsite MENA Projects Database (www.venturesonsite.com) As of June 2013, residential sector continues to maintain its position as the largest market for interiors and fit outs in the GCC with likely investments of the residential sector remains the largest market for GCC interior and fit out sector with investments worth US$ 3.3 billion being invested in various residential units expecting completion through 2013. Though the increasing emphasis by GCC governments on affordable housing schemes across the region and the large investments in these projects providing a heavy boost to the residential sector through 2011 and 2012, the growth is likely to peter out once the scheduled investments have achieved their goals, while sectors such as education and healthcare surge ahead backed by the heavy fiscal stimulus that have encouraged projects across this sector since 2011 on an increasing trend translating into greater spend on interiors and fit outs on projects nearing completion in 2012 and 2013. GCC countries are now keen on building domestic skills and competencies in these areas as a part of their diversification plans
www.workspace-index.com P a g e : 14 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
resulting in the most promising growth across these sectors in the next few years. The growth of medical tourism from the Western world to the GCC, willing to invest in state of the art medical facilities is also helping this trend.
As of June 24th 2013, Interiors and fit out spend in the hospitality sector with a share of 19 percent from projects completions in 2012 growing to 20 percent for 2013 as of June 2013, has overtaken the sluggish commercial sector holding a share of 16 percent for which shares have dropped to 14 percent as of June 2013, with a slew of investments by governments aiming to showcase the GCC as an attractive tourist destination and thereby garner valuable foreign exchange and international investors hunting for a safe growing market. Interior spend across the dominant residential, however is the undisputed and sustained leader, witnessing a massive spurt, owing to consistently high budgetary spend by all countries of the GCC to upgrade affordable housing .
Commercial sector with a share of 16 percent though witnessing sluggishness and falling rents and prices, had witnessed increasing leasing activity in the last few quarters of 2012, though greater supply of commercial office space in the latter part of 2012 and early 2013 are likely to continue to exert a downward pressure on the sector and with leasing activity remaining unchanged in the first quarter of 2013, rents are likely to remain depressed. The interiors and fit outs market however can add value to this market and increase rental yields as well as attractiveness by offering it the potential for refurbishments and property remodelling and management of existing properties to increase their value and leasability. Healthcare and education sectors also witnessed a healthy rise in shares of interior spend with government spending fuelling development of social infrastructure for the overall development and benefit of their domestic population. Retail development however remained comparatively sluggish in the first quarter of 2013 as compared to other segments, consequently losing share marginally in the interior spend from 7 percent in 2012 to 6 percent as of June 2013.
This study on GCC Interiors industry focuses on the developments in the following sectors of the Building Construction Industry.
GCC Commercial real estate sector
www.workspace-index.com P a g e : 15 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
GCC Hospitality sector GCC Residential sector GCC Retail sector GCC Medical sector GCC Educational sector
www.workspace-index.com P a g e : 16 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Chapter 1 GCC Commercial Real Estate Market
While most segments of the GCC real estate market have benefited from the increased activity across the region in the construction sector, spurred by government spending programmes and vast budgetary allocations, the commercial real estate markets continues to remain sluggish, plagued by massive oversupply that far from being corrected, continue to add additional commercial space with the most proportion of projects completed in 2012 and due for completion over 2013 across segments. Demand continues its weak recovery with prices and rentals remaining low. The prevailing market conditions have however spurred a new emerging trend for better space planning and property management and remodelling that posed a potentially vast and growing market for refurbishments for the interiors and fit outs market into 2013. Relocation of office space is another avenue that is gaining ground amid the prevailing economic conditions that have led to companies seeking office spaces that are more compact and a value for the lease obtained. These provide further scope for the remodelling and interiors.
As an investment, GCC commercial sector is recovering gradually, aided by its reputation as a safe haven with strong economic fundamentals and clear and extensive government support. Nearly US$ 10.4 billion worth of office projects have been completed at the end of 2012 alone with a further US$ 11.9 billion likely to be completed over 2013, proving an attractive market for the commercial interiors and fit outs market. Moreover, in markets such as Bahrain as a part of the incentives offered by landlords to improve rentals and encourage occupancy, interiors and fit outs are being paid for by the landlord, widening the market for interiors and fit outs in this largely sluggish market. In countries such as Qatar, while entry of new office space is continuing to exert its downward pressure on the sluggish demand for new office space, fully fitted office space is witnessing a rapid rise in demand in spite of market rentals remaining vastly unchanged in 2012, another indicator of improved prospects for the interiors and fit outs market in the region.
www.workspace-index.com P a g e : 17 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Commercial developments in the GCC are mainly concentrated in and around the capital and commercial cities of Dubai, Abu Dhabi, Riyadh, Muscat, Doha and Bahrain’s Seef district. UAE continued to witness oversupply as fresh projects depressed rentals and leasing activity though Abu Dhabi witnessed increased leasing activity amid declining lease rates in the latter part of 2012. While leasing activity remained unchanged in the first quarter of 2013, fresh supply continued to enter the market further pushing back prospects for recovery of rentals to recover soon as compared to Dubai where demand has begun to witness a marginal growth in recent quarters. Across markets of Oman, Bahrain and Qatar too commercial leasing activity remained subdued as prices continued to come under pressure under constant demand bombarded with oversupply. Jeddah and Riyadh in Saudi Arabia too are likely to have rentals and prices facing pressure as more supply continues to be added to the commercial market. These developments are likely to translate to lower growth prospects across the commercial interiors and fit outs market in 2013 as compared to 2012.
Figure 5 describes the country wide split of projects completed or likely to be completed in 2012 and 2013 in the commercial buildings sector.
www.workspace-index.com P a g e : 18 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 5: GCC Commercial Sector Projects Completed or Expected to be Completed Split by Countries (US$ Million), 2012-2013
6,000 GCC Commercial Projects Completed in 2012 and Due for Completion in 2013, (US$ Million)
5,000 2012 2013
4,000
3,000 Project Value (US$ Million)Project (US$ Value 2,000
1,000
- Bahrain KSA Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com Accounting for an estimated share of 44 percent of total projects completed in 2012, UAE remained the largest market for commercial establishments, though likely to be overtaken by Saudi Arabia in 2013, the country with the largest number of projects nearing completion in 2013, largely owing to fresh commercial developments coming on board in anticipation of growing demand from its diversification plans and fiscal stimulus, amongst the GCC countries. However, within the UAE and Saudi Arabia, commercial markets witnessed a mixed performance with rentals and leasing activity in Dubai witnessing an upward trend, while Abu Dhabi remained stagnant during the first quarter of 2013. Similarly, in Saudi Arabia, markets such as Jeddah witnessed an upward trend in prices and rents while Riyadh continued to struggle from the depressing effects of excess supply pulling down
www.workspace-index.com P a g e : 19 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
rents and prices amid sluggish demand. However, what remains common to most of these markets is the continuing supply of fresh commercial real estate entering the market presenting a growing opportunity for the interiors and fit outs market in the region.
According to the Dubai Economic Department, nearly US$ 5.9 billion worth foreign investments have been injected into the real estate market in Dubai alone with many of them being in the commercial sector, as UAE is gradually returning to uphold its position as a safe haven for investors amid the poor global economic conditions and regional turmoil of the Arab Spring. Commercial projects worth US$ 4.6 billion are estimated to be completed in 2012 with a further US$ 0.4 billion likely to be completed over 2013, drastically lower than 2012. UAE is fast losing share in the mounting stockpile of commercial projects to KSA, Qatar and Kuwait with projects worth US$ 2.5 billion, US$ 1.98 billion and US$ 0.93 billion respectively by the end of 2012 and a further US$ 5.1 billion, US$ 1.4 billion and, US$ 1.2 billion respectively by 2013.
The Kingdom of Saudi Arabia witnessed a rapid addition to commercial real estate space both by the end of 2012 and in 2013 at a faster pace than 2012. Commercial developments across the King Abdullah Financial District (KAFD) in Riyadh and ITCC projects entered the market and the public sector continues to be the primary driver of demand for large commercial office spaces with their expansion and diversification plans feeding growth in this segment though not on the same scale as other segments, while oversupply is likely to continue to dampen growth across key markets in the UAE and Qatar into 2013.
The commercial real estate market across Bahrain and Oman after a depressed stage prevailing over 2012 due to oversupply, have stabilized as markets began to woo investors resulting in increased leasing activity on the back of rent free periods, fully paid for interiors and fit outs and affordable levels of lease rates in 2012. Though much smaller in size as compared to other GCC markets, Bahrain and Oman are likely to witness growth in commercial project completions in 2013 at rates higher than 2012 as is already visible in the stabilization of rents and leasing activity in the first quarter of 2013, Oman achieving this mainly due to its newly acquired tourism focus driving establishments to the Sultanate and rising demand for quality office space.
www.workspace-index.com P a g e : 20 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
While Kuwait faced severe sluggishness and high vacancies across its commercial sector due to a combination of poor political climate plagued by uncertainty and instability through 2012, inadequate infrastructure and the aftermath of the global financial crisis, in spite of government intervention for improving the situation by taking measures such as abandoning its plans for creating its own independent office space and occupying existing vacant office areas in the market, With a return to greater political stability and stronger government intervention, fresh foreign investment and a host of market friendly policies and improvement in consumer sentiments, in the first quarter of 2013 commercial real estate is likely to recover gradually, though not substantially, but promising better prospects for 2013 than 2012.
Interiors Contracting and Fit Outs in Commercial Sector Developments The expanding supply of commercial sector in the GCC provided opportunities to the tune of US$ 1.15 billion worth of interiors development in 2012, likely to grow to US$ 1.32 billion in 2013. Figure 6 provides the country wide split of interiors contracting and fit outs spend in the commercial sector developments in GCC. The commercial interiors contracting and fit out spend includes investments catering to lighting, furnishings, office partitions, wood flooring and internal wood works, bathroom fittings etc which collectively represent a 10 to 12 percent of overall project costs involved in the construction of such premises.
www.workspace-index.com P a g e : 21 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 6: GCC Commercial Interiors and Fit out Spend by Country (US$ Million), 2012-2013
600 GCC Commercial Sector Interiors Spend (US$ Million), 2012-13
2012 2013 500
400
300
InteriorSpend Million)(US$ 200
100
- Bahrain Saudi Arabia Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com Though UAE continued to be the largest market for commercial interiors contracting and fit-outs with a expected spend of US$ 504 million for project completions of 2012, KSA is fast catching up with a spend of US$ 539 million likely to be spent on projects in 2013 while UAE is expected to record a decline in spend to US$ 390 billion, due to Saudi Arabia posting greater number of projects being completed backed by the vast spending programme of the government, while fresh projects in the commercial sector in the UAE have been limited in 2012. Moreover, while Dubai has recovered marginally, mainly in terms of Grade A office space demand, Abu Dhabi continues to be pulled down by oversupply and consequently sluggish demand for construction.
Qatar continues to hold third place with the momentum provided by the activity surrounding the World Cup 2022 that the country anticipates would bring more international companies moving and
www.workspace-index.com P a g e : 22 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
establishing offices to work on the building of the required infrastructure to host the event. However, while 2012 witnessed rapid growth of project completions, in 2013 the pace is likely to moderate as the emphasis shifts to other sectors and Qatar carefully regulating fresh supply so as to not outpace demand. Commercial projects worth US$ 2 billion are likely to be completed in Qatar in 2012 with a further US$ 1.4 billion likely to be completed over 2013 and an estimated interior spend of US$ 158 million likely, over 2013. Demand for Grade A office space continues to be concentrated around the Diplomatic Area and West Bay where the requirements are mainly concentrated for Grade A fully fitted office space in prime locations, of less than 500 square metres, with rents stable while in lower grade office space rents are on a declining trend as it continues to remain a buyer’s market as late as the last quarter of 2012. However, soon the available supply is expected to be far outpaced by the growing demand for office space as the country inches closer to the event. Kuwait commercial sector also sluggish but emerging gradually from its oversupply and low prices at fourth place, with fresh projects stemming from strong government stimulus, is likely to present interior and fit outs spend worth US$ 142 million over 2013, growing from US$ 103 million in 2012.
Oman and Bahrain though smaller markets in terms of interior and fit outs spend worth US$0.54 billion and US$ 0.31 billion for 2013, these markets represent high growth and are likely to present increasing opportunities for commercial interiors as they emerge from the slowdown owing to their incentivized revival. However, though Muscat is seeing a large amount of office supply enter the market it is mainly concentrated on Grade B and Grade C quality space, lacking basic occupier requirements. Demand for fully furnished Grade ‘A’ office space is concentrated around prime locations and continue to be scarce. In q1 2013, this was being remedied with a greater supply of commercial projects to cater to this requirement for quality office space. Small office spaces of around 50 square metres and more amenities such as facilities management and parking are in demand. Moreover, larger offices are being occupied mainly by government bodies while private organizations seem to be consolidating their positions in the Muscat commercial market at the close of 2012, all of which offer huge and growing opportunities for the interiors and fit outs sector.
The following is the list of top commercial projects expected to be completed in 2012 and due for completion in 2013 across the GCC.
www.workspace-index.com P a g e : 23 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Table 1: Major GCC wide Commercial Building Project Completions in 2012 by Project Value (US$ Million)
Project Name Country Client Value (US$ Million) Sowwah Square in Al United Arab Mubadala 1,000 Maryah Island Emirates Development Company, UAE / John Buck International (JBI) Meydan City - Metropolis United Arab Meydan 400 Emirates Abu Dhabi Investment United Arab Abu Dhabi Investment 354 Council Headquarters Emirates Council IPIC Headquarters in Abu United Arab International 245 Dhabi Emirates Petroleum Investment Co. (IPIC) Dar Al-Qeblah Complex Saudi Arabia Munshaat Real Estate 180 Project Company Al Wasat Complex in Al Saudi Arabia Al Zamal Real Estate 170 Kharj Company Al Baker Twin Towers in Qatar Mr. Ahmed Abdul Aziz 161 West Bay Al Baker Al Sayyah Tower in Business United Arab Al Sayyah & Sons 150 Bay Emirates Investment Co. LLC Tamkeen Tower in Yasmine Saudi Arabia Al Rajhi Investment 150 District, Riyadh Group, Saudi Arabia Doha High Rise Office Qatar Sheikh Saoud Bin Mohd 125 Building Bin Ali Al-Thani Samiriya Towers Qatar Mr. Ali Mohammad Al 124 Khayareen February 25 & February 26 Kuwait Tijara & Real Estate 118 Investment Company Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
Table 2: Major GCC wide Commercial Building Projects Due for Completion in 2013 by Project Value (US$ Million)
Project Name Country Client Project Value (US $ Million) King Abdullah Financial District Saudi Arabia Rayadah Investment 3,700 (KAFD) - Phase 2 - 20 Buildings Company / Public Pension & New Towers Agency (PPA) / World Trade Center, Saudi King Abdullah Petroleum Saudi Arabia Saudi Aramco 533
www.workspace-index.com P a g e : 24 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Project Name Country Client Project Value (US $ Million) Studies & Research Center (Kapsarc) - Commercial Buildings ADNOC New Headquarters United Arab Abu Dhabi National Oil 490 Emirates Company (ADNOC) Industrial Gate City in Riyadh Saudi Arabia Mawten Real Estate Co. / 432 Masheed Arabia Headquarters for the Ministry Saudi Arabia Ministry of Finance, Saudi 400 of Finance in Riyadh Arabia King Abdullah Financial District Saudi Arabia Public Pension Agency 380 (KAFD) - Wyndham Hotel & (PPA) / Rayadah Investment Office Tower Company / Wyndham Hotel Group, US Central Bank of Kuwait Kuwait Central Bank of Kuwait 375 Headquarters King Abdullah Financial District Saudi Arabia Public Pension Agency 300 (KAFD) - Phase 2 - Capital (PPA) / Capital Market Market Authority (CMA) Tower Authority, Saudi / Rayadah Investment Company Global Bay View 2 & 3 in United Arab Best Homes 300 Business Bay Emirates Headquarter for Ministry of Saudi Arabia Ministry of Finance, Saudi 255 Finance in Riyadh Arabia Olaya Towers in Riyadh Saudi Arabia General Organization for 250 Social Insurance (GOSI), Saudi Arabia Empire Tower in Shams on United Arab Al Tajir Real Estate 250 Reem Island Emirates The Headquarters Business Saudi Arabia Al-Dar Al-Khasa for Urban 240 Park in Jeddah Development / Adeem Al- Wataniya Company Shemoukh Twin Towers in C - Qatar Real Estate Services Group 200 Ring Road Qatar Foundation Qatar Qatar Foundation for 200 Headquarters Building Education Science & Community Development Saba Tower 4 in Jumeirah Lake United Arab Saba Properties JLT 181 Towers Emirates King Abdullah Financial District Saudi Arabia Rayadah Investment 166 (KAFD) Phase 2 - Crystal Company Towers
www.workspace-index.com P a g e : 25 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Project Name Country Client Project Value (US $ Million) Bay Gate in Business Bay United Arab Akar Properties LLC 164 Emirates The One Tower at Tecom United Arab Al Yasat Holdings 150 Emirates Tasameem 1 in Business Bay United Arab Tasameem Real Estate 150 Emirates Prudential Towers at the United Arab Al Tajir Real Estate 150 Jumeirah Village Emirates Al Hekma (Wisdom) Tower in United Arab Pearl Properties 150 Dubai Emirates Commercial Square in Business United Arab Damac Properties, Dubai 150 Bay Emirates Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
www.workspace-index.com P a g e : 26 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Chapter 2 GCC Hospitality Sector
As GCC governments gained a reputation in the Arab region as consistent fiscal stimulators guiding stable economic growth in the aftermath of the Arab Spring and global economic slowdown, investment began to flow back into the region that began to be perceived as the new destination for tourism and safe investment. International hotel chains such as Rotana and Movenpick made hasty plans for expansion in the region to benefit from the renewal trend and the GCC hospitality sector has begun its healthy upward trend, though oversupply and pressure on the RevPar (Revenue per available room) continue on the aside into 2013. While countries such as Saudi Arabia have opened up newer markets for the hospitality sector by easing legislation on construction around the holy shrines of Mecca and Medina, Qatar has geared up to host the World Cup 2022 event already garnering its share of hospitality projects to boost its project pipeline while UAE has tried to emulate the model by bidding to host the World Expo in 2020 to attract visitors and investment on par with Qatar’s World Cup hosting buzz. Oman has used tourism as the primary focus of its vision for 2020 and upgrading surrounding infrastructure to attract investments into the Sultanate that is likely to bring in its share of investments in its hospitality sector in the next few years. As Kuwait and Bahrain recover from their adverse political climate and poor recovered consumer confidence, Kuwait is likely to witness a greater number of hotel project completions in 2013 over a poor performance in 2012, though Bahrain is likely to take longer to recover its tourism and hospitality market and thus sport a lower number of project completions in this segment over 2013.
On the demand side, thriving retail and tourism market and large disposable incomes of the domestic population are likely to push up prospects in the GCC hospitality market estimated at US$ 22 billion as of 2012 is likely to grow to US$ 27 billion by 2015 according to a hospitality report by Alpen Capital. The largest shares are from Saudi Arabia and UAE with the largest number of hospitality projects expected to be completed in 2012 and 2013, as the heavy government investment plans promote tourism, retail and infrastructure as an attractive destination for international and local investors in the hospitality sector. Though, Oman, Qatar and Kuwait offer
www.workspace-index.com P a g e : 27 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
smaller shares of 0.3 percent, 4.9 percent and 0.8 percent, respectively, in hotel project completions in 2012, as of June 2013, the number of hospitality projects that they are estimated to bring to the market in 2013 are likely to more than double as compared to the UAE which is likely to moderate the number of projects into 2013 to not risk deepening the existing oversupply situation prevailing across Abu Dhabi and Dubai, while the Northern Emirates offers some opportunity with the government announcing large allocations for tourism development in that region.
The GCC had projects completed in the hotel sector worth US$ 5.9 billion in 2012 with an expected US$ 8 billion due to be completed in 2013 with Saudi Arabia, UAE and Qatar sporting the largest growth in the number of hospitality projects under construction as of June 2013. Figure 7 provides the split of all hotel projects completed in GCC Countries in 2012 and expecting completion in the 2013.
www.workspace-index.com P a g e : 28 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 7: GCC Hotel Project Completions in 2012 and Expected to be Completed in 2013 (US$ Million), 2012-2013
3,000 GCC Healthcare Projects Completed in 2012 and Due for Completion in 2013 (US$ Million) 2012 2013
2,500
2,000
1,500 ProjectMillion)(US$ Value 1,000
500
- Bahrain KSA Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com Though UAE continues to hold the largest share in the GCC hotel project completions in 2012, Saudi Arabia continues to be perceived by investors as the second most attractive of the GCC hospitality markets in the region with hotels performing at high occupancies and supply being ramped up in 2012 and 2013 with additions to its existing estimated supply of 53,000 hotel rooms that is likely to grow as much as 60 percent over the next few years with the thrust provided to religious tourism across Mecca and Medina bringing on board large developments such as The Jabal Omar Development in Mecca and Elaf Group in Jeddah though Riyadh markets continue to show a flat performance at the close of 2012. Hotel performance, in terms of RevPar and occupancies, has continued to improve in 2012 when compared to the previous year.
www.workspace-index.com P a g e : 29 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
UAE however continues to be plagued by oversupply with markets such as Abu Dhabi imposing restrictions on fresh hotel licenses to avoid a crisis situation and further declines in occupancies and RevPar as new supply coming online such as the Ritz Carlton Grand Canal could put further pressure on the market; Demand across Abu Dhabi and Dubai, however remain buoyant with anticipated attractions such as opening of Yas Island Waterworld and upcoming events such as F1 continue to attract visitors.
While a bid by the UAE to host the World Expo in 2020 could ease some of the oversupply situation in later years if won, currently, UAE continues to be plagued by oversupply as fresh supply entered the market in 2012 and also likely in 2013. Some projects that have added to the existing supply of hotels in the UAE at the close of 2012 included the JW Marriott Marquis touted to be the tallest hotel in the world, Fairmont- The Palm, two Rotana hotels. Additional hotel openings slated for 2013 including the Conrad Hotel, the Novotel Al Barsha, the Oberoi Business Bay, the Doubletree added to the Sofitel Palm Jumeirah Beach resort expected completion in 2014, and the Intercontinental Dubai Marina, are likely to exert further pressure on the Dubai hospitality market into 2013 and beyond. Adding the significant hotel components of mixed used developments such as the Mohammed Bin Rashid City, the Madinat Jumeirah expansion due for completion in 2015, the Dubai Mall expansion project that is planned to include another hotel managed by Emaar are all likely to add to the existing oversupply. A gradual return to normalcy of the global favourite retail and leisure destination and significant tourist incentives boosting footfalls to the Emirate such as the opening of the Al Maktoum International Airport to accommodate increased tourist arrivals and transit passengers are factors that could help ease the oversupply situation a little in the medium term. As for the Northern Emirates, heavy government push to tourism with large budget allocations is likely to keep the hospitality market in the region buoyant as the last quarter witnessed the opening of the Ajman Palace, a five star hotel. Abu Dhabi saw a boost in hotel occupancies with the hosting of the F1 Grand Prix in November, one of the busiest seasons for the Emirate and the opening of the Centrino Capital Centre hotel in the last quarter of 2012 and another 2 Rotana hotels slated for completion in 2013 and 2014.
www.workspace-index.com P a g e : 30 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Overall with the boost in tourism from expansion of the Ethiad Airways, improvements to infrastructure such as airports and heavy emphasis on tourism by the Emirates, the prospects for the hospitality sector though sluggish in the short term are likely to improve over the long run as oversupply is absorbed with improved growth prospects.
Qatar has begun attracting its share of retail, tourism, and sporting and leisure destination investors as the country with the largest per capita income in the world and one of the fastest growth rates in 2012 that has tremendously helped its hospitality sector shoot ahead of the UAE in terms of project completions in 2013. According to third party research, Qatar’s capital Doha, witnessed one of the highest Average Daily Rates (ADR) in the GCC region in November 2012 at 6.5 percent, which was also a healthy increase over previous years. This is a clear indicator that demand for hotel rooms is likely to outpace the expected supply of 17 hotels that have been announced and under construction with occupancies likely to reach 65 to 70 percent by 2016 as the country nears the World Cup 2022 timeline.
Qatar is also ensuring oversupply does not crop up in the interim by hosting a number of trial events in the sporting arena and preparing other attractions to attract tourists from all spheres to ensure a healthy growth is sustained in the long run.
Oman has also positioned itself well as a tourist destination both for leisure and business, with its convention and exhibition centre opening in 2012 which has translated into a healthy boost to the tourist arrivals at the Muscat International Airport, where passenger traffic increased by 20 percent in the first half of 2012 as compared to the corresponding period in the previous year as the country improves its Airport with expansions and increases supply of hotels from 12,000 as of 2012 to 20,000 expected by 2015. According to the Ministry of Tourism, an additional supply of hotels over 2012 and 2013 is likely to be to the tune of nearly 2000 hotel rooms as demand remains buoyant to absorb the increased supply. Muscat enjoyed the largest occupancy levels in the region at 60 percent as of 2012, an increase of over 14 percent over the previous year.
Bahrain has witnessed the beginnings of a return to normalcy towards the end of 2012 with improving consumer confidence helping RevPar in the hospitality sector grow by 26 percent as
www.workspace-index.com P a g e : 31 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
compared to the previous year. Fresh supply also came on board with the Holiday Inn Express near the Bahrain International Airport and Marriot’s Residence Inn Extended Stay hotel. However, stability in the long run is required to ensure sustained improvement in global investor and tourist outlook to improve hotel market performance. Occupancies are likely to gradually increase from 34 percent in 2011 to about 57 percent by 2016 as measures to restore confidence in the economy and project it as an attractive tourist destination by the government by hosting events such as the hosting the Bahrain International Air Show and the Gulf Incentive Business Travel Exhibition.
Kuwait though not quite as popular as the other tourist destinations in the Gulf due to relatively less endowed attractions and tourism draws, however the adverse political situation combined with oversupply has hit occupancies and RevPar in 2012. With the gradual return to political stability and return of consumer and investor confidence, the government taking the situation in hand and increasing focus on the tourism sector with expansion plans for its international airport to double its current capacity of 7 million passengers per year, the situation, is likely to adjust itself gradually, aided by the reversal of tourist flows to the GCC region from the rest of the Arab World and the less stable European neighbours.
Hotel Interiors Contracting and Fit-outs Sector Figure 8 provides the country wide split of interiors and fit-out spend in the GCC Hotel sector for the years 2012 and 2013.
www.workspace-index.com P a g e : 32 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 8: GCC Hotel Interior Contracting and Fit out Spend (US$ Million), 2012-2013
1,000 GCC Hospitality Sector Interiors Spend (US$ Million), 2012-13
900 2012 2013
800
700
600
500
400 InteriorSpendMillion) (US$
300
200
100
- Bahrain Saudi Arabia Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com The positive upturn in the GCC hospitality sector spells improvement and opportunity for interiors development not only in terms of interiors and fit out contracts on fresh projects, but also for hotel refurbishment and fit-outs, as investors in the hospitality sector use the downturn as an opportunity to acquire existing hotels and revamp them or revamp their existing hotels with fresh interiors and fit outs to attract visitors. Hotel projects completed in the year 2013 will involve an interior spend of US$ 1, 816 million, an approximate 22.5 percent of total project costs of US$ 8, 069 million, a healthy growth from US$ 1,337 million on project completions in 2012 worth US$ 5,944 million.
With economic recovery and growth prospects positive, the GCC hospitality sector is at the crossroads where the right investments across the region in the interiors market can help it use the recovery to its best advantage, supplemented by the refurbishments market that existing hotel
www.workspace-index.com P a g e : 33 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
chains and new entrants are sure to tap in a bid to improve their competitive position in the market over 2013 and beyond.
Table 3 and 4 provide a list of major hotel project completions in 2012 and slated for completion in 2013, respectively.
Table 3: Major GCC wide Hotel Project Completions in 2012 by Project Value (US$ Million)
Project Name Country Client Value (US$ Million) Barwa City - Phase 1 Qatar Barwa Real Estate Company, 1,343 Qatar Central Park in Dubai United Arab Emirates Dubai Properties / Deyaar 1,090 International Financial Centre Etihad Towers in Abu Dhabi United Arab Emirates H.H. Sheikh Suroor Al Nahyan 681 JW Marriott Marquis Hotel in United Arab Emirates Emirates Group 680 Dubai Abraj Al Bait Complex - Swiss Saudi Arabia King Abdulaziz Endowment / 600 Hotel Swiss Hotels & Resorts Al Ghurair City Expansion United Arab Emirates Al Ghurair Centre 544 in Al Rigga Landmark Building in Abu United Arab Emirates Presidential Court 500 Dhabi Corniche Queue Point at Liwan United Arab Emirates Al Mazaya Real Estate 460 St. Regis Hotel & Qatar Al Fardan Real Estate 412 Residential Towers Bay Central in Dubai United Arab Emirates Dubai Select Properties 408 Marina Al Bustan Complex in Abu United Arab Emirates Al Hamid Group 354 Dhabi Plot No.9 Mixed-Use United Arab Emirates East and West International 350 Development in Abu Dhabi Group Marina Town at Salalah Oman Muriya Tourism 350 Beach Development Company Al Sadd Development Qatar Barwa Real Estate Company, 330 Complex Qatar 13 Hilton Garden Inn Saudi Arabia Hilton Hotels Corporation 300 Hotels (International Operations) / Al Hokair & Sons Group, Saudi Conrad Hotel on Sheikh United Arab Emirates Private Property 293 Zayed Road Management (PPM)
www.workspace-index.com P a g e : 34 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Project Name Country Client Value (US$ Million) United Tower at Sharq Kuwait United Real Estate Company 280 (URC) Al Masarat Towers in Saudi Arabia Al Masarat for Construction 250 Jeddah Corniche Co. Ltd Jumeirah Al Ain Hotel United Arab Emirates Al Farida Investment 218 Palm Towers Qatar Dar Investment and 218 Development Company Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
Table 4: Major GCC wide Hotel Projects Slated for Completion in 2013 by Project Value (US$ Million)
Project Name Country Client Project Value (US$ Million) Marriott Hotels in Jizan Saudi Arabia Marriott International; 500 Global Sales Middle East & Africa City Center Expansion Qatar Al Faisal Holding 330 Project Company / Al Rayan Tourism & Investment Company Al Habtoor Island Resort United Arab Emirates Al Habtoor Group 326 and Spa Al Diyafa Hotel & Saudi Arabia Al Diyafa Real Estate 300 Residential Tower Company Kempinski Hotel - Al Saudi Arabia Al-Othman Group / 300 Khobar Kempinski Group Rotana Hotel at Salalah Oman Muriya Tourism 300 Beach Development Company Ritz Carlton Hotel Abu United Arab Emirates Abu Dhabi National 272 Dhabi Resort & Spa Hotels Company (ADNHC) 30-Floor (Granada) Saudi Arabia Tabung Haji, Malaysia / 267 Hotel in Makkah Abdul Lateef Jamil Real Estate Jabal Al Kaba Saudi Arabia Abdul Lateef Jamil Real 250 Development - Anjum Estate Hotel- Phase 1 Regent Emirates Pearl United Arab Emirates Tourism Development & 235 Hotel in Abu Dhabi Investment Co. (TDIC) / Atlas Telecom, Dubai Jumeirah Al Khor Hotel United Arab Emirates Dubai Properties 235
www.workspace-index.com P a g e : 35 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Project Name Country Client Project Value (US$ Million) at Dubai Healthcare City Fairmont Hotel - Riyadh Saudi Arabia Business Gate / Tatweer 230 Holding / Kingdom Holding Company Emerald Palace Hotel & United Arab Emirates Emerald Palace Group 200 Resort on Jumeirah Palm Island J.W. Marriott at the United Arab Emirates Onyx Building Systems 190 Dubai Healthcare City 2 (Nilona Tower) Resort in Al Sodah Oman Muriya Tourism 175 Island Development Company ITCC Park in Riyadh - Saudi Arabia Public Pension Agency 150 Phase 1 - Crowne Plaza (PPA) / Information Hotel & Convention Technology & Center Communication Complex Sheraton Four Points Kuwait Al Shaya Group 150 Al-Tayseer Towers Saudi Arabia Naseel Holding Co. For 150 Commercial Development Aloft Hotels in Riyadh Saudi Arabia Fawaz Abdulaziz Al 150 Hokair & Co Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
www.workspace-index.com P a g e : 36 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Chapter 3 GCC Residential Development Sector Overview
As the global economic slowdown and oversupply in most sections of the GCC residential real estate market began to impact property prices, rentals and leasing across the GCC on the one hand, socio political unrest brought into focus the gap that existed between the demand for affordable housing and the dearth of supply in this category. As many regions across the MENA were plagued by unrest arising from a lack of social infrastructure, GCC economies proactively began investing in programmes to upgrade their existing social infrastructure and fill the gaps in this segment of the market. Since 2011, spending on social infrastructure and affordable residential developments have been the main focus areas of governments across the GCC, notably Saudi Arabia, Kuwait, Bahrain, Oman and the UAE, by deploying fiscal stimulus to boost the flagging real estate sectors from the adverse impact of the global economic slowdown.
Qatar too made allocations in the residential sector as a part of its National Vision 2030 to improve the living conditions of its citizens and also to prepare the infrastructure required to host the prestigious World Cup Football event in 2022. After a sluggish period in early 2012, Qatar residential markets picked up on the advent of greater expatriates in preparation for the implementation of the agenda for the World Cup 2022 construction and planning. Pearl Qatar continued to be the priced the highest in terms of real estate in the country and in non freehold areas where only GCC nationals are allowed to transact.
The Kingdom of Saudi Arabia wood its residential markets with over 10,000 housing loans toward the construction of 12, 000 affordable homes across the Kingdom and finally bringing on board the much awaited mortgage law that is expected to help ease credit to the housing sector. On the downside, rigorous construction activity around the newly opened up regions of Mecca and Medina have suddenly fuelled raw material shortages and inflation in essential construction materials such as cement within a short time span, to control which the government has had to enact hasty price
www.workspace-index.com P a g e : 37 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
and supply controls. The much awaited Kingdom Tower in Jeddah, touted to become the largest mixed use development, is likely to come on board by the end of 2013, adding significantly to the supply in the upper end of the residential market.
Residential markets across the UAE, especially the overcrowded markets of Dubai were the worst hit in the real estate crash of 2009, however with the economy well on the road to recovery in 2012, aided by decongestion measures as much as a bid to boost the residential sector of the UAE capital, Abu Dhabi, government employees have been ordained to reside only in the capital, and if there have been commuters from Dubai they will need to shift residence to Abu Dhabi, an ordinance that is likely to affect nearly 10,000 public sector employees and equivalent to the amount of real estate that is likely to come into the Abu Dhabi residential market by the close of 2012, as older residential units struggle to maintain good occupancy levels.
Dubai residential markets witnessed a slight upturn in the latter part of 2012; residential property sales witnessed a growth of 13.5 percent as compared to a decline of 1.8 percent in 2011 as a number of new residential projects entered the market. Significant projects that came online in the latter part of 2012 included the world’s largest residential tower Princess Tower in Dubai Marina and the Lakeside Residence in Jumeirah Lake Towers. The beginning of 2013 also witnessed more residential projects coming online such as the 198-unit luxury villa development Millennium Estates in Meydan City, Azure Residences on Palm Jumeirah with 170-units and The Address Residence Fountain View in Old Town with 280-units. Rents and prices increased at a healthy pace in Dubai, Abu Dhabi also though at a slower pace and across the Northern Emirates, where affordable housing is in huge demand as well with a gap to the tune of 48,000 plots by 2025.
Villa demand across prime locations remained strong prompting the Mudon Development of the Dubai Properties Group to resume construction, which had been earlier put on hold amid the poor market conditions. There also continues to be an undersupply in the affordable or middle income segment for Emiratis of more than 10,000 units, across the UAE, though some project deliveries scheduled for end of 2012 could ease the situation in that segment. However, the central bank’s move to cap mortgage levels to 50 percent of property value in order to reduce the shadow of debt
www.workspace-index.com P a g e : 38 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
looming over the UAE property market, will have an adverse impact on the property markets by further slowing down absorption of the excess supply in the market.
Figure 9 provides the summary of residential project completions in 2012 and likely to be completed in 2013.
Figure 9: GCC Residential Project Completions in 2012 and Due for Completion in 2013 (US$ Million), 2012 – 2013
16,000 GCC Residential Projects Completed in 2012 and Due for Completion in 2013 (US$ Million)
14,000 2012 2013
12,000
10,000
8,000
6,000 ProjectMillion)(US$ Value
4,000
2,000
- Bahrain KSA Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
As oversupply and low prices and rentals continue to plague the recovering UAE property market, the country has made a strong climb back to normalcy, as it continues to lead the market in terms of the total residential project completions in 2012 with a share of 49 percent of projects completed as of June 2013. Saudi Arabia followed with its equivalent social housing programme aimed at boosting the residential sector and eating into the share of UAE into 2013 when its share of the residential pie
www.workspace-index.com P a g e : 39 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
is likely to grow to 36 percent from 31 percent of estimated 2013 project completions as of June 2013. Residential projects worth US$ 13,675 million will be completed in UAE over 2013, followed by Saudi Arabia which is likely to forge ahead significantly in 2013 with likely projects nearing completion worth US$ 10,883 million to be committed to residential development, resulting in the likely fall in UAE’s share likely to 45 percent in 2013.
Driven by the high growth in population and the large proportion of expatriates, heavy influx of population in 2012 to the tune of 140,000 residents between end 2011 and November 2012, demand across Qatar’s Diplomatic District and the Pearl remain buoyant across its residential sector commanding high rents. The World Cup 2022 event hosting and the preparations in the run up to it are further likely to keep the market for residential real estate positive in Qatar over 2013, despite the additional supply entering the market.
The Kuwait residential development sector has continued to post modest growth in rents and prices throughout 2012, unaffected by the political uncertainty and turmoil facing the country and clouding its investment prospects in other sectors, with the exception of the traditional slow down during the Ramadan season, sustained partly by the KWD 37 billion (US$ 131.9 billion) Kuwait Development Plan of the government to boost developments in this sector. Political uncertainty however, remains on the agenda of the new government after March 2013 and whether it would be able to help the economy sustain recovery into 2013 and measures to boost the real estate sector.
Oman remained a promising market in 2012 with expatriate population fuelling demand for quality residential units across prime locations in Muscat, especially across areas where private investment is permitted such as the Wave, Madinat Qaboos, Qurum, Shatti Al Qurum, and Muscat Hills. However, poorly designed residential units in non prime locations are witnessing a decline in rents and prices causing inequities in the residential market that is likely to correct only gradually over 2013. Omani government is also expected to increase its investment in the housing sector by 45 percent in 2013 over the previous year’s budget to OMR 469 million from OMR323 million in 2012. Significant projects include the trio jointly referred to as the Integrated Tourism Complex that include three prominent real estate locations, the Muscat Hills, The Wave and the earlier stalled
www.workspace-index.com P a g e : 40 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
project of the Saraya Bandar Jissah and are expected to feed the growing demand for residential space in the ITC.
Bahrain residential markets were badly hit by the political unrests surrounding the Arab Spring, which itself arose partly from discontent at the extreme shortage of affordable housing with a waiting list for social housing at 55,000 people and poor social infrastructure in the country. This situation promptly snowballed into a sharp erosion of consumer confidence and a drastic fall in investments across the real estate market in the country. While oversupply and investor caution continue to keep prices soft at the higher end of the market, the Bahrain government at the other end of the market, stepped in with massive plans to provide affordable housing to alleviate the unrest among its masses and in a bid to shorten the wait time for housing developments, it was allowed to utilize 46 percent of the GCC “Marshall Plan” to fund the housing projects providing a breather to the residential markets. A grand total of 57,000 housing units are likely to enter the market as a part of the plan over the next five years. The government plans include three large residential developments as new cities at East Hidd, East Sitra and Northern Town, expected to make available approximately 23,000 units by the end of 2016.
With these plans, the residential rents across Bahrain after remaining steady for the past few quarters of 2012, seem to have bottomed out in the beginning of 2013, with current demand stemming mainly from GCC nationals and the US navy personnel remaining strong enough to absorb the extra supply likely to come on board over 2013. However, the affordable housing scheme is likely to result only in an additional 6000 housing units being supplied by the end of 2013 which is not likely to reduce the waiting list for the homes significantly unless the supply is stepped up by another 6000 units annually according to analysts.
The lower end of the residential market had become virtually impossible for private developers to step in with the prevailing high land prices, inadequate infrastructure across the remote areas where these developments were planned and high construction costs associated with the developments leaving them to the medium and higher end of the market while the government catered to the lower tier.
www.workspace-index.com P a g e : 41 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Residential Sector Interiors Contracting and Fit-Out Sector Figure 10 provides the country wide split of interiors contracting and fit out spend involved in the GCC residential sector over 2012 and 2013.
Figure 10: Residential Sector Interiors Contracting and Fit out Spend (US$ Million), 2012-2013
1,600 GCC Residential Sector Interiors Spend (US$ Million), 2012-13
2012 2013 1,400
1,200
1,000
800
600 InteriorSpend Million)(US$
400
200
- Bahrain Saudi Arabia Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com UAE remains the largest market with interior spends with estimated spend of US$ 1,504 million likely in 2013. An estimated US$ 13.7 billion worth of residential units are expected to complete in the UAE in 2013 with interior contracting and fit outs accounting for approximately 11 percent of total project costs. KSA with US $ 1,197 million and Qatar with US$ 313 million are the second and third largest markets with others likely to contributing shares between 36 and 9 percent in 2013. Growth in interiors is likely to be lower in 2013 for the UAE and Qatar as compared to other markets
www.workspace-index.com P a g e : 42 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
as caution prevails and recovery is gradual, as government backed affordable housing projects continue to eat up shares of other countries by Saudi Arabia. The following tables list of top projects completed across the GCC residential sector in 2012 and likely to be completed in 2013, respectively.
Table 5: Major GCC wide Residential Sector Project Completions by Project Value (US$ Million), 2012
Project Name Country Client Value (US$ Million)
Princess Noura Bint Saudi Arabia Ministry of Finance, 1,300 Abdulrahman University - Saudi Arabia Married Junior Staff Accommodation Al Khobar Lakes - Phase 1 Saudi Arabia Emaar Middle East 1,300 Properties, Saudi Arabia / Al Oula Development Co. Prince Sultan College for Saudi Arabia Ministry of Defence and 789 Health Sciences - Residential Aviation, Riyadh Units Veneto at the Waterfront - United Arab Nakheel Corporation 707 177 Villas Emirates Al Khobar Lakes - Phase 1 - Al Saudi Arabia Emaar Middle East 700 Nada Village Properties, Saudi Arabia / Al Oula Development Co. Etihad Towers in Abu Dhabi United Arab H.H. Sheikh Suroor Al 681 Emirates Nahyan Immigrants Housing Project - Saudi Arabia King Abdullah Bin 606 Package 1 (Hasma/Hisma) Abdulaziz Foundation for Housing Development Al Khobar Lakes - Phase 1 - Al Saudi Arabia Emaar Middle East 600 Ghadeer Village Properties, Saudi Arabia / Al Oula Development Co. Landmark Building in Abu United Arab Presidential Court 500 Dhabi Corniche Emirates Queue Point at Liwan United Arab Al Mazaya Real Estate 460 Emirates St. Regis Hotel & Residential Qatar Al Fardan Real Estate 412 Towers Bay Central in Dubai Marina United Arab Dubai Select Properties 408 Emirates Al Bustan Complex in Abu United Arab Al Hamid Group 354
www.workspace-index.com P a g e : 43 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Dhabi Emirates Plot No.9 Mixed-Use United Arab East and West 350 Development in Abu Dhabi Emirates International Group Marina Town at Salalah Oman Muriya Tourism 350 Beach Development Company Al Sadd Development Qatar Barwa Real Estate 330 Complex Company, Qatar Integrated Residential City at Saudi Arabia Ewaan Global Residential 325 North of Jeddah Company Granada Oasis for Residential Saudi Arabia General Organization for 320 and Office Buildings Social Insurance (GOSI), Saudi Arabia Jumeirah Park Villa United Arab Nakheel Corporation 308 Community - Package 1 Emirates 23 Marina at Dubai Marina United Arab Hircon International LLC 300 Emirates Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
Table 6: Major GCC Residential Sector Projects Due for Completion in 2013 by Project Value (US$ Million)
Project Name Country Client Project Value (US$ Million) King Faisal University in Al Ihsa - Saudi Arabia King Faisal University 7,106 Staff Accommodation - Phase 1 Al Bait Towers in Makkah Saudi Arabia Munshaat Real Estate Project 3,180 Company / International Ejarah and Investment Co / Aref Investment Group / The High Commission For The Development of Makkah Province / King Abdulaziz Endowment Expansion of Makkah Holy Haram Saudi Arabia The High Commission For The 2,500 - Northern Courtyard Development of Makkah Province Residential City in Al Tuwal - Saudi Arabia Ministry of Finance 1,857 Phase 1 Six Towers at the Gate District in United Arab Sorouh Real Estate 1,635 Shams Emirates
www.workspace-index.com P a g e : 44 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Project Name Country Client Project Value (US$ Million) Al Turaif Living Museum Saudi Arabia Arriyadh Development 1,500 Authority (ADA) Bay Square at the Business Bay United Arab Dubai Properties 1,009 Emirates Etihad Village in Al Raha Beach United Arab ALDAR Properties 900 Emirates Burj Rafal in Riyadh Saudi Arabia RAFAL Real Estate 800 Development Co. Ltd / Kempinski Group Ajyad Al Masafi Development in Saudi Arabia The High Commission For The 700 Makkah Development of Makkah Province / Abu Ryash Real Estate Palazzo Versace Resort in Culture United Arab Emirates International Holding 626 Village Emirates / Sunland Group (Australia) / Gulf Resources / Abraaj Capital Lamar Towers in Jeddah Saudi Arabia Cayan Investments / Zahran 553 Real Estate Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
www.workspace-index.com P a g e : 45 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Chapter 4 GCC Retail Development Sector Overview
As a safe haven for investors, GCC economies have vastly benefited from healthy economic growth, consistently high oil prices, and government backed spending, increase in public salaries of employees across economies such as Kuwait, Qatar and Saudi Arabia and economic diversification plans combined with the large expatriate population, have all contributed to high disposable incomes and rapid urbanization in recent years. Consequently, beginning with the UAE and spreading over to other GCC economies, international retail brands have found GCC economies the favourite retail destination for investors as well as tourists. With the high disposable incomes of the consumers, and home to a largely expatriate population, the GCC has become synonymous with luxury retailing in the global retail marketplace. This sector has been enjoying steady uninterrupted growth despite the global economic slowdown and the supply shocks that deterred growth across the other segments in 2011 and 2012.
The latest AT Kearney’s 2012 index of top ranked emerging markets which included the 12th Global Retail Development Index (GRDI) ranked Oman a relatively new entrant with major retail expansion plans among the top 10 apart from the traditional favourite UAE at 7 and also ranked Kuwait 12th and Saudi Arabia 14th among the top 20 global retail destinations.
UAE, the leading luxury retail destination of the world, continued to attract visitors mainly backed by its retail and man-made tourist attractions, while cautiously keeping a check on supply through regulating new hotel licenses in areas such as Abu Dhabi to avoid oversupply. A recent development includes the commissioning of a Design District named D3 located adjacent to the Business Bay area in Dubai, in order to encourage and develop the Emirate’s design, fashion and luxury sectors and provide a platform for designers and retailers in a mixed use development that accommodates design institutes alongside residential, office and retail space through a Business park, a Creative cluster housing commercial and retail space, an Esplanade with boutique hotels and restaurants and a Residential cluster targeting designers and design savvy residents.
www.workspace-index.com P a g e : 46 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Some noteworthy facts about the GCC retail sector’s performance are apparent in that Dubai Mall, the world’s most visited shopping centre with over 54 million visitors in 2011 witnessed a 35 percent increase in average sales in the period and the Mall of Emirates, UAE’s second largest mall recorded the best performance in 2011 since it was founded in 1992.
A noteworthy project announced in Dubai in the last quarter of 2012 was the “Mall of the World" project, as part of Mohammed Bin Rashid City, touted to become the world's largest shopping precinct on completion. Al Ghurair Centre Mall expansion in Deira and the Burjuman Mall expansions are other noteworthy retail redevelopment measures announced in 2012 and redevelopment measures late in the year. Abu Dhabi too has announced a number of high quality retail projects due for completion in 2013 that include the Deerfields Town Square and the Al Maryah Island "Galleria" apart from the Bawabat Al Sharq Mall that has added significant amounts of GLA with up to 60 percent completion reached project wide.
Saudi Arabia too has attracted its share of retailers mainly owing to its highly affluent and young, domestic population that offers a huge and growing demand base. It has also made earnest efforts to develop its religious tourist corridor of Mecca and Medina with greater private investments also encouraging growth and fanning growth in the retail sector. As a favourite of luxury retailers rivalling the UAE, KSA is also undergoing significant expansion in GLA over 2012 and 2013 with retail and mixed use developments sprouting such as the Kingdom Centre that has already achieved 100 percent occupancy, the planned Dubai based Landmark groups three neighbourhood shopping malls under the “Oasis Brand” slated for completion by end of 2013 and the already open Landmark managed mall in the city of Abha apart from the Kingdom’s largest shopping mall at the Jabal Omar Project in Mecca on the drawing board.
Demand for retail space is set to grow at a rate of 9.5 percent per annum during 2010 to 2012. Leading brands and retailers from world over are clamouring for a share of the GCC retail pie with GLA expansions the norm across these countries. With demand supportive, the retail development sector is growing at a healthy pace and likely to continue its expansion at a rapid pace in the future.
www.workspace-index.com P a g e : 47 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Oman too has witnessed a 20 percent increase in passenger traffic at its new Muscat international airport in the first half of 2012 over the previous year, underlining the success of its tourism focused strategy likely to present vast growth opportunities for the interiors and fit outs sector in 2013.
Kuwait’s largest shopping centre, the Avenue Mall, features the largest number of international brands in the country with two new malls in the pipeline. Oman is being deemed as the new destination for retailers especially specialty and luxury ones, with the retail sector sporting one of the largest growth in the MENA region at 29 percent in 2012, according to third party research. The leading trend in the retail markets is also the focus on private labels as competition heats up and players concentrate on their bottom line.
Qatar, despite having the largest proportion of expatriate population in the world, has the least developed retail markets in the region, though the market is the third fastest growing market in the region with significant expansions in hyper and super markets in 2012 and retail sales likely to grow at an annual rate of 7 percent up to 2016. Qatar is also a growing market for fashion and luxury retailers driven by one of the largest per capita disposable incomes in the world.
Figure 11 depicts the retail construction project completions in 2012 and those that are slated for completion in 2013.
www.workspace-index.com P a g e : 48 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 11: Retail Construction Projects with Completion in 2012 and 2013 (US$ Million), 2012-2013
1,400 GCC Retail Projects Completed in 2012 and Due for Completion in 2013 (US$ Million)
1,200 2012 2013
1,000
800
600 ProjectMillion)(US$ Value
400
200
- Bahrain KSA Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com With a focused effort to bring back lost custom in the field of design , luxury and retail, the UAE has managed to reestablish itself as a favourite destination for global retailers aided by strong recovery in its economy and real estate markets. Kuwait and Saudi Arabia also join the leaders in retail projects completed in 2012, estimated as of June 2013, mainly owing to the enormous size of their retail projects. In 2013, Qatar is likely to shoot into the spotlight, due to its status as the country with the world’s largest disposable income, thus gaining shares in terms of retail projects likely to be completed in 2013 followed by the new retail destination Oman, with its heavy passenger traffic at Muscat following its international airport expansion and its tourism thrust attracting luxury and specialty retailers from across the world. Retail sector in Bahrain, which is relatively small when compared to its GCC neighbours, is likely to make a modest comeback as it tides over its political
www.workspace-index.com P a g e : 49 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
tensions and resumes investor confidence into 2013, with already recovering consumer confidence in the latter half of 2012.
Retail Development Interiors Contracting and Fit-Out Sector Figure 12 provides the country wide split of interiors and fit out spend involved in the development and refurbishment of the retail sector in GCC for the year 2012.
Figure 12: GCC Retail Interiors Contracting and Fit-out Spend (US$ Million), 2012-2013
300 GCC Retail Sector Interiors Spend (US$ Million), 2012-13
250 2012 2013
200
150
InteriorSpend Million)(US$ 100
50
- Bahrain Saudi Arabia Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com The interior contracting and fit-out developments in the retail sector is estimated to earn US$ 507 million on projects worth US$ 2,255 million expected to complete by 2012. Kuwait with an investment of US$ 217 million on the expected completion of the Phase 3 of the Avenue Mall and Saudi Arabia with its large scale luxury retail expansions and an interior spend of US$ 184 million
www.workspace-index.com P a g e : 50 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
hold the largest shares in the market as of 2012. However, UAE with spurt in number of retail outlets slated for completion in 2013 is likely to surge ahead, with a massive retail interiors and fit outs spend of US$ 275 million in 2013 followed by Qatar with projects such as Barwa City Phase 1 Mixed use development toward attracting visitors for the World Cup 2022 nearing completion in 2013 is likely to present opportunity to the tune of US$ 145 million retail interior spend. Though other retail markets are smaller in size, Oman, Kuwait and Saudi Arabia are growing healthily with high number of retail project completions in 2013 translating into expected interior and fit out spends of US$ 65 million, US$ 47 million and US$ 33 million, respectively in 2013. The following is the list of retail projects with completions in 2012 and over 2013, respectively.
Table 7: Major GCC wide Retail Projects with completion in 2012 by Project Value (US$ Million)
Project Name Country Client Project Value (US$ Million) Avenue Shopping Mall Kuwait Mabanee Company, 908 Expansion - Phase 3 Kuwait Flamingo Mall in Jeddah Saudi Arabia Castle House Group 350 Al Qasr Development Saudi Arabia Dar Al Arkan 150 Project - Mall Package Development Company, Riyadh Mall in Al Khor Qatar EMKE Group, Qatar 137 City Centre Mall and United Arab Emirates Majid Al Futtaim 109 Retail Park in Fujairah Investments, Dubai / Fujairah Government Galaxy Mall in Gharaffa Qatar Ezdan Holding 100 Wafra Mall Kuwait Wafra Real Estate 52 Company Lulu Hypermarket in Oman EMKE Group, Oman 26 Buraimi Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
Table 8: Major GCC wide Retail Projects Due for Completion in 2013 by Project Value (US$ Million)
Project Name Country Client Project Value (US$ Million) Yas Mall In Yas Island United Arab ALDAR Properties 644
www.workspace-index.com P a g e : 51 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Project Name Country Client Project Value (US$ Million) Emirates Gulf Mall at Gharafa Qatar Sheikh Nasser Bin 200 Abdulla Al Thani / Business Trading Company Sahara City in Sharjah - East United Arab Sahara Center 200 Retail Expansion Emirates Commercial Development at Al Qatar Sheikh Hamad Bin Jassim 197 Mirqab Bin Jabor al-Thani World Trade Center in Abu United Arab ALDAR Properties 189 Dhabi - The Emporium Emirates Dragon Mart in International United Arab Nakheel Corporation 143 City Expansion Emirates World of Salalah Oman Ministry of Tourism, 130 Oman / United Real Estate Company (URC) Al Wakra Mall Qatar Ezdan Holding 110 Island City Shopping Centre in United Arab Tourism Development & 100 Abu Dhabi Emirates Investment Co. (TDIC) / Ahmed Bin Darwish & Sons Shopping Complex at Markhiya Qatar Mr. Al Emadi (IBA Group) 55 Mall at Deerfields Town Square United Arab Mubarak and Brothers 50 Emirates Investment Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
www.workspace-index.com P a g e : 52 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Chapter 5 GCC Medical Development Sector Overview
With the growing importance of social infrastructure in the GCC budgets since 2009, wherein almost all GCC economies have made increasingly large allocations toward upgrading their healthcare infrastructure in a bid to improve the standards of living of its population, while diversifying their economies from the exclusive dependence on hydrocarbons to fuel growth. The services sector and more specifically the healthcare sector has proved to be recession proof across the GCC as per findings of analysts, sustained by the vast government investments and boasting the latest and state of art equipment and healthcare infrastructure in the world.
Healthcare across the GCC is predominantly state administered though many countries have embarked on ambitious Public Private Partnerships (PPPs) and privatization in this sphere to take advantage of the latest technology and skills available in the global healthcare marketplace. As large disposable incomes and urbanization have fuelled an alarming growth of lifestyle related diseases such as diabetes and heart conditions, the sector has begun to attract global healthcare investor attention as well in recent years.
Significant announcements in this sphere in recent years include that of the Saudi Arabian Ministry of Health to procure more healthcare services from the private sector health providers to improve the provision of healthcare services. The Ministry of health has in 2012 signed a host of healthcare contracts worth over SR 4 billion including 30 hospitals in the pipeline. The population of the Kingdom is estimated to be around 25 million and currently there are 22 beds for every 10,000 people. The Kingdom’s budget for 2013 has appropriated US$ 26.7 billion for construction and expansion of hospitals and healthcare facilities across the Kingdom including the ambitious ongoing project for the development of five medical cities that are currently under construction. The budget allocation would go toward the construction of 117 hospitals, 750 primary healthcare centres, and 400 emergency centres. Targets for improving the amount of hospital beds available as well as the ratio of physicians per bed have also been set.
www.workspace-index.com P a g e : 53 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Following Saudi Arabia, UAE too aims to rectify the current lop sided supply demand ratio in healthcare services marked by an oversupply of medical services in certain specialities and increasing the efficiency of public and private healthcare facilities particularly in the capital cities of Abu Dhabi and Dubai. In line with the above the Dubai Health Authority (DHA) had announced a survey to collect comprehensive data from its private and public hospitals, poly clinics, Dubai Healthcare city and diagnostic and primary healthcare centres Kuwait too has made a major foray into upgrading its healthcare infrastructure with 10 new hospitals in the pipeline. The UAE 2013 budget of AED 44.6 billion social spending will have the largest share of 51 percent, a significant portion of which is earmarked for upgrading healthcare infrastructure.
Following the largest markets of UAE and Saudi Arabia, others such as Qatar, Oman, and Bahrain too have announced ambitious developmental programs including the construction and refurbishment of their existing healthcare systems.
Figure 13 depicts the medical construction project completions in 2012 and those that are expecting completion in 2013.
www.workspace-index.com P a g e : 54 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 13: GCC Healthcare Projects with Completion in 2012 and 2013 by Country, (US$ Million)
3,000 GCC Healthcare Projects Completed in 2012 and Due for Completion in 2013 (US$ Million) 2012 2013
2,500
2,000
1,500 ProjectMillion)(US$ Value 1,000
500
- Bahrain KSA Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com In 2012 and more so in 2013, the GCC governments have all allocated huge proportions of their budgets to upgrade social infrastructure and significant shares were apportioned to upgrading the hospital infrastructure that had for long been considered inadequate measured by the global healthcare parameters of measurement, as privatization is as yet an emerging concept in the region, the primary driver of growth across most countries in with the best healthcare systems in the world. As of June 2013, Qatar shot ahead in the race to upgrade its medical facilities in a bid to host the World Cup 2022 event with the highest standards of healthcare available to the sports and tourist population visiting the nation with projects worth US$ 2.5 billion likely to be completed in 2013. This was closely followed by Saudi Arabia, UAE and Kuwait with healthcare project completions worth US$ 2.04 billion, US$ 745 million, and US$ 248 million, respectively, expected over 2013.
www.workspace-index.com P a g e : 55 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
This phenomenal rise in the healthcare spend in Kuwait may be attributed to the Government finally taking initiatives to upgrade its healthcare system which had come under strain for having the least number of hospital beds of 1.4 per thousand amongst all the GCC nations. The recent massive overhaul of the nation’s healthcare system is all set to complete with a large spend by Kuwait from its government budget in 2013. Saudi Arabia and UAE too were ranked the second and the third largest spenders of healthcare in Middle East. The other three nations of Oman, Kuwait and Bahrain, despite focusing their efforts on developing their healthcare systems, have a much smaller share in the total value of healthcare project completions.
Healthcare Development Interiors Contracting and Fit-Out Sector Figure 14 provides the country wide split of interiors and fit out spend involved in the development and refurbishment of the medical sector in GCC for the years 2012 and 2013.
Figure 14: GCC Healthcare Sector Interiors and Fit out Spend (US$ Million) by Country, 2012 - 2013
250 GCC Healthcare Sector Interiors Spend (US$ Million), 2012-13
2012 2013
200
150
100 InteriorSpendMillion) (US$
50
- Bahrain Saudi Arabia Kuwait Oman Qatar UAE
www.workspace-index.com P a g e : 56 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com The interiors contracting and fit-out developments in the healthcare sector is estimated to earn US$ 457 million on projects worth US$ 5,715 million expected to complete by 2013. While Qatar shot ahead in the last quarter of 2012 with interior and fit out spend expected approximating US$ 198 million in 2013, Saudi Arabia, with interior and fit outs spends expected of US$ 164 million has emerged as a closely competing market as with other segments followed by the UAE with US$ 60 million interiors and fit out spend, followed by Kuwait with an estimated interior and fit outs spend of US$ 20 million based on project completions in 2013. It is only Saudi Arabia and the UAE which continued significant investments in healthcare from 2012 onwards, while other countries have stepped up to the upgrade only since early 2013. In Bahrain and Oman healthcare project completions have also happened but on a much smaller scale offering a small but growing market as well for interiors and fit outs into 2013. The following table provides the top hospital projects with completion in 2012 and over 2013.
Table 9: Major GCC wide Hospital Project Completions in 2012 by Project Value (US$ Million)
Project Name Country Client Project Value (US$ million) Sheikh Khalifa Specialist United Arab Emirates Ministry of Public Works 217 Hospital in Ras Al & Housing, Dubai Khaimah 227 Clinics in Different Saudi Arabia Ministry of Health, Saudi 200 Areas of Saudi Arabia Arabia Princess Noura Bint Saudi Arabia Ministry of Higher 150 Abdulrahman University Education, Saudi Arabia - Hospital Four 50-Bed Hospitals in Saudi Arabia Ministry of Health, Saudi 100 Different Areas in Saudi Arabia Hospital for Adnoc in United Arab Emirates Abu Dhabi National Oil 82 Ruwais Company (ADNOC) Medical City in Jizan Saudi Arabia Ministry of Health, Saudi 80 Arabia New National Hospital Saudi Arabia National Medical Care 75 Co. 500 - Bed Hospital in Al Saudi Arabia Sulaiman Al Habib 70 Khobar Medical Centre 500 Bed Hospital in Saudi Arabia Ministry of Health, Saudi 57 Riyadh Arabia
www.workspace-index.com P a g e : 57 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Project Name Country Client Project Value (US$ million) 500- Bed King Abdulaziz Saudi Arabia Ministry of Health, Saudi 56 Specialized Hospital - Arabia Sakaka New England Center for United Arab Emirates Seha - Abu Dhabi Health 40 Children in Abu Dhabi Services (NECC) King Khalid Hospital in Saudi Arabia King Saud University 40 Riyadh - Service Building (KSA) Package Cardiac Centre at Sultan Oman Ministry of Health, 39 Qaboos Hospital Oman 200- Bed General Saudi Arabia Ministry of Health, Saudi 35 Hospital in Al Ihsa Arabia Refurbishment of Oasis United Arab Emirates Oasis Hospital 30 Hospital in Al Ain Three 50 - Bed Hospitals Saudi Arabia Ministry of Health, Saudi 30 in Different Areas of Arabia Saudi Arabia Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
Table 10: Major GCC wide Hospital Projects Due for Completion in 2013 by Project Value (US$ Million)
Project Name Country Client Value (US$ Million) Sidra Medical & Research Centre Qatar Qatar Foundation for Education 2,400 Science & Community Development Cleveland Clinic in Al Maryah United Arab Mubadala Development Company, 1,300 Island Emirates UAE Jaber Al Ahmed Al Sabah Kuwait Ministry of Health, Kuwait / 1,057 Hospital Ministry of Public Works (MPW), Kuwait King Faisal Specialist Hospital & Saudi Arabia Ministry of Health, Saudi Arabia / 242 Research Center Expansion - King Faisal Specialist Hospital & King Abdullah Center of Tumors Research Centre (KFSH) & Liver Diseases King Abdullah Specialist Hospital Saudi Arabia National Guard Health Affairs 200 for Children King Saud University - Medical Saudi Arabia King Saud University (KSA) 150 City King Faisal University in Al Ihsa - Saudi Arabia King Faisal University 135 University Hospital
www.workspace-index.com P a g e : 58 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
King Faisal University in Al Ihsa - Saudi Arabia Ministry of Higher Education, Saudi 131 Hospital Arabia Additional Building to Al Qassimi United Arab Ministry of Public Works & 90 Hospital Emirates Housing, Dubai Jazan University - University Saudi Arabia Ministry of Higher Education, Saudi 82 Hospital Arabia / Jazan University Iranian Hospital Extension in United Arab Iranian Hospital 81 Wasl Emirates King Khalid University Hospital Saudi Arabia Ministry of Higher Education, Saudi 70 Extension in Riyadh Arabia / King Saud University (KSA) 300- Bed Hospital in East of Saudi Arabia Ministry of Health, Saudi Arabia 69 Jeddah New Medical Center in Fujairah United Arab New Medical Center 68 Emirates Paediatric & Maternity Hospital Saudi Arabia Ministry of Health, Saudi Arabia 53 in Rafha King Fahd Specialized Hospital in Saudi Arabia Ministry of Health, Saudi Arabia 51 Buraydah Dallah Hospital Expansion - Saudi Arabia Dallah Hospital, Saudi 50 Riyadh Medical Tower in Riyadh Saudi Arabia Ministry of Health, Saudi Arabia 50 Medical Complex 300- Bed Hospital in North of Saudi Arabia Ministry of Health, Saudi Arabia 50 Riyadh Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
www.workspace-index.com P a g e : 59 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Chapter 6 GCC Educational Development Sector Overview
GCC governments have proactively begun investing on social infrastructure projects since the advent of the global economic slowdown and the spread of socio-political unrests in the form of the Arab Spring in the Middle East. The governments have felt the need to upgrade their domestic infrastructure as a part of their plan to diversify their economies from its excessive dependence on hydrocarbons and as citizens are neither skilled not equipped to handle the plethora of skills required for their ambitious programmes, GCC economies have had to hire expatriate labour on alarming scales causing further social tensions among the nationals. The investment across the educational development sector is therefore a move to not only appease the masses, but also upgrade their skill base for better knowledge and technology transfers across industries. This spending trend continues into 2012 and 2013 with several projects initiated earlier reaching completion and new additions being initiated in the year. Saudi Arabia has led the transformation with the highest budget allocation in history worldwide for the development of the education sector including education infrastructure.
In Saudi Arabia, as a part of the Saudiization programme, Saudi nationals are gradually likely to replace expatriates in the work force, with the Kingdom enforcing the employment of Saudi nationals as a proportion to the expatriates for all companies in the Kingdom on a firm time line. This requires a quick and large building up of skill sets and education that is possible only with a massive upgrade of the educational system. Other economies such as Qatar, the UAE and Kuwait too have provided vast allocations for education, with UAE allocating nearly 22 percent of its budget toward upgrading educational infrastructure.
Figure 15 depicts the country wise split educational construction projects with completion in 2012 and 2013.
www.workspace-index.com P a g e : 60 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 15: GCC Educational Projects with Completion in 2012 and 2013 by Country, (US$ Million)
8,000 GCC Education Projects Completed in 2012 and Due for Completion in 2013 (US$ Million)
7,000 2012 2013
6,000
5,000
4,000
3,000 ProjectMillion)(US$ Value
2,000
1,000
- Bahrain KSA Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com The Kingdom of Saudi Arabia ranked the largest educational investor in GCC with educational developmental projects worth US$ 7.03 billion expecting completion in 2013, a massive leap from US$ 1.57 billion completed in 2012 in its effort to implement Saudization where all employers operating in the Kingdom are mandated to employ a given proportion of Saudi citizens across their organizations failing which they are liable to attract heavy penalty. Saudi Arabia plans to adopt the largest budget in the country’s history in 2012, with a 19 percent increase in expenditures compared to 2011 and this has translated into larger number of project completions in 2013 as well. The largest portion of the budget has been allocated to education, health and municipal services. The budget included plans to build 742 new schools in addition to the 2,900 already under construction, and refurbishment of 2,000 existing schools. These funds will also support the establishment of an
www.workspace-index.com P a g e : 61 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
electronic college and 40 new colleges; the development existing universities; and an increase in the number of scholarship programs that allow Saudi students to study abroad.
Following Saudi Arabia, Qatar is the second largest country in the region with educational developmental projects worth US$ 880 million reaching completion in 2013, as of June 2013. The Qatari Government too has allocated a sizeable budget expenditure of QR 22 billion in funding educational development programs including the construction of new schools in addition to refurbishment and development of universities besides increasing the scholarship programs. The UAE has overtaken Kuwait marginally, ranking third in terms of educational project completions with total projects worth US$ 678 million witnessing completion in 2013 as against educational project completions for Kuwait at US$ 490 million in 2013. This is followed by Oman and Bahrain taking the rear, with projects worth US$ 88 million and US$ 141 million, respectively. Recovering steadily from the aftermath of political instability experienced in 2011 and recovered investor confidence, Bahrain has a moderate amount of educational development projects expecting completion in 2013 though steadily increasing with greater government emphasis. Oman with a predominantly expatriate population and smaller in size and scale, ranks among the last in the region in this segment.
Educational Development Interiors Contracting and Fit-Out Sector Figure 16 provides the country wide split of interiors and fit out spend involved in the development and refurbishment of the Educational development sector in GCC for the years 2012 and 2013.
www.workspace-index.com P a g e : 62 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Figure 16 GCC Educational Interiors and Fit out Spend (US$ Million) by Country, 2012-2013
600 GCC Education Sector Interiors Spend (US$ Million), 2012-13
2012 2013
500
400
300
InteriorSpendMillion) (US$ 200
100
- Bahrain Saudi Arabia Kuwait Oman Qatar UAE
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com As of June 2013, the interiors contracting and fit-out developments in the educational development sector is estimated to earn US$ 741 million on projects worth US$ 9,261 million expected to complete by 2013. Saudi Arabia with an investment of US$ 559 million on the expected completion projects worth US$ 6,984 million and Qatar with investments worth US$ 70 million on the completion of projects worth US$ 880 million, have bagged the largest shares of the educational development interiors contracting and fit out pie in 2012, surging ahead of UAE and Kuwait with investments of US$ 54 million and US$ 39 million, respectively, expected toward interiors contracting and fit outs in 2013. The following tables list the major GCC wide educational projects completed or expected to be completed in 2012 and slated for completion across 2013.
www.workspace-index.com P a g e : 63 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Table 11: Major GCC wide Educational Project Completions in 2012 by Project Value (US$ Million)
Project Name Country Client Value (US$ Million) Al Shaqab Equestrian Academy Qatar Qatar Foundation for Education 407 Science & Community Development Imam Islamic University - Saudi Arabia Ministry of Higher Education, Saudi 160 Phase 3 Arabia King Saud University for Health Saudi Arabia Saudi National Guard Health Affairs 150 Sciences Imam Islamic University - Saudi Arabia Imam Islamic University 110 Female's Colleges of Education & Science Institute of Applied Technology United Arab GHQ 106 at Mohammed Bin Zayed City Emirates Zulfa University - Science Saudi Arabia Ministry of Higher Education, Saudi 81 College Arabia Zayed Desert Learning Center United Arab Al Ain Wildlife Park & Resort 76 at the Al Ain Wildlife Park & Emirates Resort Library for Qatar University Qatar Qatar University 69 Hail University - Computer Saudi Arabia Ministry of Higher Education, Saudi 65 Science College Arabia Yanbu University College - Saudi Arabia Royal Commission for Jubail and 60 Men's Campus - Phase1 Yanbu (RCJY) 4 Schools Around Doha & in Qatar Public Works Authority (Ashghal) 54 Villages - Package 2 9 Kindergartens around Doha Qatar Public Works Authority (Ashghal) 53 and in Villages - Package 4 Business College in Al Kharj Saudi Arabia King Saud University (KSA) 50 Taibah University in Madina - Saudi Arabia Taibah University 50 Medical College for Men Taibah University in Madina - Saudi Arabia Taibah University 50 College of Medicine for Women Taibah University in Madina - Saudi Arabia Ministry of Higher Education, Saudi 50 College of Education for Men Arabia / Taibah University Taibah University in Madina - Saudi Arabia Taibah University / Ministry of 50 College of Education for Higher Education, Saudi Arabia Women Al Baha University - Saudi Arabia Ministry of Higher Education, Saudi 50 Administration Building Arabia / Al Baha University Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
www.workspace-index.com P a g e : 64 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Table 12: Major GCC wide Educational Sector Projects Due for Completion in 2013 by Project Value (US$ Million)
Project Name Country Client Value (US$ Million) King Saud University - Girls Saudi Arabia King Saud University (KSA) 2,400 College Al Baha University - Phase 1 Saudi Arabia Ministry of Higher Education, 610 Saudi Arabia / Al Baha University King Khalid University at Abha - Saudi Arabia Ministry of Higher Education, 492 Medical City Male Campus Phase Saudi Arabia / King Khalid 2 University Tabouk University - Phase 1 Saudi Arabia Ministry of Higher Education, 375 Saudi Arabia / Tabuk University School of Islamic Studies in Qatar Qatar Foundation for Education 210 Education City Science & Community Development Extension to Ras Laffan Qatar Qatar Petroleum (QP) / Qatar 165 Emergency & Safety College Foundation for Education Science & Community Development Police College at Mubarikiya Kuwait Ministry of Public Works 157 District (MPW), Kuwait Students Centre at Education City Qatar Qatar Foundation for Education 123 Science & Community Development Northwestern College of Media & Qatar Qatar Foundation for Education 120 Communication at Education City Science & Community Development Emirates Flight Training Academy United Arab Emirates Airlines 108 at the Dubai World Central Emirates Hail University - Medicine College Saudi Arabia Ministry of Higher Education, 108 Saudi Arabia Imam Islamic University - College Saudi Arabia Ministry of Higher Education, 107 of Computer Science Saudi Arabia Sohar University Expansion - Oman Sohar University 104 Phase 1 Police Training Institute in Doha Qatar Ministry of Interior, Qatar 104 Sulaiman Al Rajhi University - Saudi Arabia Sulaiman Al Rajhi Colleges 100 Medical Colleges Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
www.workspace-index.com P a g e : 65 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Conclusion As compared to the last quarter of 2012, the GCC economies seem to be well on the path of recovery with most segments of the real estate markets witnessing some degree of improvements in prices, rentals and yields or an increase in project completions or at least having bottomed out from the last remnants of the slowdown that plagued economies not only in the GCC or the MENA region, but economies worldwide, leaving many of the GCC markets reeling with a number of projects either stalled or shelved. Though 2012 spelt clear recovery for these economies, some of them continued to face socio-political upheaval and uncertainty causing subdued performances in the private sectors. This however has uniformly changed for the better in 2013, with the governments investing large parts of their budgetary surpluses into revival, recovery and diversification.
However, while the residential, retail, hospitality, educational and hospital sectors have stood to gain from the government support in terms of huge spending on projects across the economy, the commercial sector continues to reel from oversupply in many of these economies.
The significant trends emerging from this highly volatile market with a mixed performance across sectors involved a growing opportunity for the interiors and fit outs refurbishment and remodelling market wherein tightened budget strings brought into focus the need for smaller spaces and better utilization of existing spaces across segments.
Moreover, with the revival of the GCC economies, now perceived as a safe haven for investors both within the region and worldwide, the interiors and fit outs market is set to face a thriving market from the growing segments of the GCC real estate market with large number of project completions in 2012 and likely in 2013, spurring growth.
These factors combined with a significant investment by GCC governments on upgrading social infrastructure such as affordable housing, educational and healthcare facilities are likely to boost building construction markets across the region and present huge opportunities for the Interiors Contracting and Fit outs sector in 2013 and beyond.
www.workspace-index.com P a g e : 66 www.ventures-me.com
GCC Building CONSTRUCTION and Interiors OVERVIEW June 2013
Though recovery of commercial real estate sector is yet subdued, residential, hospitality, retail and education are the sectors where opportunities are emerging for the interior and fit outs sector aplenty.
www.workspace-index.com P a g e : 67 www.ventures-me.com