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MENA Construction Industry Gathers Momentum

by Eddie Rayner

The construction industry continued to maintain momentum in 2021, with a strong finish to the year being a highlight, according to JLL’s newly-released MENA Construction Economics and Cost Insight Review.

The report shows there was $156bn worth of projects awarded during 2021 across the MENA region as widespread enhancements to the construction sector and digital transformation continued to drive growth in the region.

The Egypt, KSA and UAE announcements of their planned 2022 government spending are also expected to be a catalyst for growth. The report also identifies new trends over the past two years and a shift in societal behaviours could lead to future development opportunities.

Strong finish to the year highlighted in new JLL report

“We believe the pandemic has prompted a change in mindset and envisage clients and developers alike will look for a change in their project processes, which in turn will lead to new or revived strategies to promote project success,” said Gary Tracey, Head of Cost Management-Project & Development Services, JLL MENA.

“We also expect market sentiment will continue to improve as commodity prices stabilize of the course of 2022.”

Key takeaways from the report include:

  • Economics – The continuation of business and leisure activities to pre-pandemic levels will continue to encourage economic growth within the region. Egypt’s headline Purchasing Managers Index (PMI)1 increased to 49.0 in December. The UAE’s PMI for November reached 55.9 – the highest reading since June 2019.
  • Projects – KSA represented the highest value of awarded projects for 2021 with a recorded $41.3bn. The residential sector was consistently the busiest market across Egypt, KSA and UAE. The total infrastructure awards in 2021 for Egypt were $6.9bn, while KSA infrastructure totalled $3bn and $973m for the UAE.
  • Commodities (metals) – Throughout 2020 and 2021 metal prices were susceptible to volatile changes within the market triggering prominent price increases. This was closely linked to global demand and logistic constraints caused by the pandemic. Increasing transportation costs from higher fuel prices also impacted material costs in the region.

1 Purchasing Managers Index (PMI) measures the performance of the non-oil private sector. Above 50 represents an expansion in the non-oil private sector, below 50 represents a contraction and 50 represents the baseline.