The GCC projects market fell in value by 19% in the first 6 months of the year compared with the same period in 2009.

According to latest data, just over USD 49 billion worth of contracts were awarded in the first 6 months compared with the USD 60 billion worth of deals signed in the equivalent period last year.

The drop in project awards was despite an additional USD 35 billion in GCC capital spending allocated in government 2010 to 2011 budgets and a general improvement in the region's economies.

Mr Edward James head of MEED Insight said that it is somewhat surprising to see project awards falling compared with last year. The first six months in 2009 were at the height of the global recession and we would have expected project spending to have been lower then now, especially as there has been an improvement in the macroeconomic environment.

Analysis of the data highlights a sharp drop of more than 60% in the value of Saudi Arabian contract awards between the 2 periods from USD 29 billion to just USD 11 billion. The decline was partly as a result of delays on the USD 11 billion Yanbu refinery project. Delays in awarding several other high value deals were another factor.

Mr James said that the downward correction in contract awards in Saudi Arabia is a concern because many in the market had been looking to the kingdom to make up the loss of project activity caused by the Dubai real estate crash. However, we are hopeful that much of the shortfall will be made up in the second half of the year.

A feature of the H1 of 2010 was the growing competition for new work in the GCC. In key markets, such as the Abu Dhabi building sector, contractor margins were estimated to have halved since their mid 2008 peak.

(Sourced from Arabian Business)