|By TAP Staff| The growing political instability in the Gulf has not affected spending on infrastructure development, which is expected to swell by 77 percent in 2014 over last year.
According to latest compilations by Global Investment House, the value of new infrastructure projects in GCC is expected to surge to $86 billion this year.
The value of new projects in Qatar and the UAE would rise significantly to $26.2 billion and $15.8 billion, respectively, in 2014 from just $9.4 billion and less than $3 billion in 2013. Small contributors in 2013, such as Kuwait and Bahrain, are expected to witness ten-fold and eight-fold jump in total value of projects to $3.5 billion and $3.4 billion, respectively, in 2014. Value of new projects undertaken in Oman is projected to increase 35 percentYoY to $7.4 billion in 2014. However, the total value of new projects in Saudi Arabia declined 13 percentYoY to $29.3 billion in 2014 from that in 2013.
In contrast to the swelling infrastructure spending, however, profits of GCC contractors dropped 17.7 percent YoY to $42 million in 2Q14 from $51 million in 2Q13, the first decline in five quarters. However, heavyweight Arabtec continued to grow during the quarter (10.8 percent YoY), albeit at slower pace. On a QoQ basis, sector profits fell sharply by 35.7 percent, mainly due to drop in income of Arabtec and others.
Total value of projects awarded fell to $1.6 billion in 2Q14 from $2.9 billion in 2Q13, mainly due to a decline in the order receipt of Arabtec and others. Arabtec’s estimated order receipt fell to $0.6 billion in 2Q14 from $1.5 billion in 2Q13, while DSI’s order receipt decreased to $768mn in 2Q14 from $1.1 billion in 2Q13. Total backlog grew 10.8%YoY and 6.4%QoQ to $13.5 billion in 2Q14.
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