Published by linker 5
Posted on September 10, 2020
The COVID-19 (C-19) pandemic and collapsing oil prices have had an unprecedented and compounding effect on the GCC Construction industry in the Middle East and globally. As stakeholders grapple with the ‘new normal’ that COVID-19 has presented, they also face an opportunity to rethink the way they used to work and discover new opportunities to change the status quo collectively.
Deloitte has just launched the 10th edition of its GCC Powers of Construction 2020, which considers how the Construction industry can come together amidst the new normal to create a future in which everyone thrives. The report provides an overview from experts in the field on the overall performance of the Construction industry across the region, what the industry needs to address to create a fair, collaborative and transformed contractual and project controls environment and how this will create the new normal needed to embrace the opportunities in the GCC and wider Middle East region. Topics discussed in the Deloitte report include GCC projects market outlook, real estate sector performance, financing contractors, contract renegotiations, technology, project liquidity, and smart design, among others.
“We are currently witnessing the move of the Construction industry’s response to COVID-19 from a Respond to a Recover phase. In the early Respond phase, the industry’s natural focus turned to ways to effectively and safely execute projects at the pace and scale required to minimize social and economic damage and to contain costs while focusing on cash preservation,” explains Cynthia Corby, Partner and Construction Leader, Deloitte Middle East. “As the regional industry moves into the Recover phase, it is essential to adopt a strategic view where the focus should be on the effective execution of projects and payments to contractors being made in a timely manner to ensure the much-needed liquidity to complete the projects under execution.”
The Deloitte report finds that the Real Estate sector performance in Dubai continued to be impacted by oversupply in 2019, which resulted in falling capital and rental values, particularly in the residential sector. Meanwhile, COVID-19 has caused significant disruption across all real estate sectors and the magnitude of the impact due to travel restrictions and lockdown measures will depend on the shape and pace of recovery.
What COVID-19 and the oil price fall have done is served to focus minds on the need to accelerate economic diversification and movements toward each country’s national vision. From that at least many major new opportunities will emerge and companies which can pre-empt and grasp these changes will be those that will be best-positioned to face the challenges ahead,” explains Oliver Morgan, Director, Head of Real Estate Development, Deloitte Middle East. “Looking at Saudi Arabia, diversification efforts, social reforms, and government-led investments in infrastructure, entertainment and the tourism sector will be key to the real estate sector’s recovery and growth in the long term.”
Key findings in the report include:
“As we begin the second half of 2020, the effects of the COVID-19 pandemic will continue to be felt across the Middle East in all sectors, with construction continuing to be one of the most impacted. Stakeholders in the region need to collaborate and focus on how to maximize the opportunities which exist in a fairer contractual relationship, to deliver projects in a new decade under a new normal to avoid the pitfalls of the past and thrive in this new and unprecedented landscape,” concludes Corby.
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