Middle East, North Africa Set for $4.3 Trillion in Construction Investments Through 2020

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The MENA (Middle East-North Africa) infrastructure and construction market is among the world's most attractive given its sheer size, according to a Bank of America Corporation Merrill Lynch global research report.

Over the next 15 years, the construction sector in the region will be a key beneficiary of the implementation of structural reforms to raise productivity of the non-oil sector and the total economy's potential output.

A total of $4.3 trillion is forecast for investment in construction across MENA through 2020. This represents an increase of nearly 80% from today's spending in the sector. According to the report, Saudi Arabia currently accounts for 46% of the region's project pipeline and is set to lead in infrastructure and construction spending.

In a global perspective, MENA is expected to account for 12% of the global emerging markets and 4.4% of the world construction markets within the next decade.

"Due to many years of underinvestment, we expect Saudi Arabia to take the lead in terms of construction spending in the region as the kingdom responds positively to pressing social needs, such as labor, housing and education," said Philip Southwell, Bank of America Merrill Lynch president and country executive.

MENA contract awards have been somewhat disappointing for the period January to May 2012, declining by 41% from a year earlier. The main reasons for this decline are delays in awarding petrochemicals projects in Egypt and infrastructure contracts in the United Arab Emirates, Kuwait and Iraq.

"The construction and infrastructure sub-sectors in Saudi Arabia, however, remain strong, growing by 177% over the same period and currently accounting for 46% of the 2012-13 MENA project pipeline, totaling $448 billion," said Mutahar Mushed, CEO of Merrill Lynch Saudi Arabia.

"It is a trend we expect to continue. With its young and expanding population, Saudi should remain the most buoyant market, in line with its overall economic development plan. Furthermore, the recent approval of the mortgage law should help to drive growth in residential construction in response to the current housing shortage," said Southwell.

For related information, see July 12, 2012, article -- Middle East Launches $32.7 Billion Energy Projects in 2012, but Careful Management is Needed.

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