Gulf Construction Online - Infrastructure workload increases again

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According to the survey, infrastructure workloads are expected to rise over the coming 12 months.

Infrastructure workload increases again

01 June 2021

The infrastructure workloads across the Middle East and Africa (MEA) have increased for the first time since the pandemic hit, according to the latest RICS Global Construction and Infrastructure Monitor.

As countries across the region start to come out of lockdowns, the latest survey shows that infrastructure will lead the region’s construction recovery, as a net balance of over 15 per cent reported an increase in current workloads, and more than 45 per cent respondents expect infrastructure workloads to rise over the coming 12 months.

Following over a year with many working from home, it’s unsurprising that respondents to the survey point to a greater increase in ICT infrastructure, nearly 34 per cent in Q1 and up from +14 per cent in Q4 2020, stated the RICS report.

Workloads across private residential and private non-residential are still falling, but to a lesser degree than in previous quarters, said the report.

Looking at activity in each country, Saudi Arabia recorded solid growth in construction activity over the previous quarter, but Oman and the UAE saw a fall in overall construction workloads.

Despite numerous factors holding back activity at present, financial constraints continues to be the biggest impediment to growth, with 89 per cent of respondents reporting this as an issue, according to RICS monitor.

Alongside this, over two-thirds of respondents feel material costs and a lack of demand are also impacting activity, it stated.

With the subdued current activity, employment levels fell, albeit to a lesser degree, for the fourth consecutive quarter. However, despite the subdued opportunities at present, respondents are more optimistic for the year ahead as 12 per cent more anticipate an increase in headcount.

Also looking ahead, respondents expect workloads across all sectors to increase over the next 12 months, however, profit margins remain flat, it stated.

Sean Ellison, RICS Senior Economist, said: “Feedback from Chartered Surveyors indicate that the recovery in global construction markets is gaining momentum, propelled by work on infrastructure projects in Asia Pacific and residential projects in Europe (and to a lesser degree the Americas). With few exceptions, RICS professionals in most global markets expect a pickup in construction market activity across all segments of the market over the next year.”

However, the recovery is not without its challenges. Increasingly, respondents are pointing out difficulty in sourcing materials amid supply chain bottlenecks, which appear to have resulted in the cost of materials pushing up overall construction costs, stated Ellison.

“In markets that rely on migrant labour, the persistent restrictions on mobility have led to a shortage of labour. As a result, construction costs are expected to rise twice as much as tender prices over the next twelve months, which will undoubtedly put margin pressure on construction firms,” he added.