The Opportunities for Investment in the Middle East Infrastructure Industries

It has become an open secret that the most part of the Arab region has only been good for the construction sector and concerns of oil wealth distribution in that sector are beginning to be raised. The region’s largest opportunities lie with Saudi Arabia where the government is focused on a country wide infrastructure investment that is set to diversify the income streams of the nation, which might bring liberation from the oil dependency. Annual investments have been well above $150b although these are strained by rapid economic and population growth in the region.  The fundamentals of population growth and welfare are the major drivers behind this boom in construction as opposed to others lie the Dubai boom.

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Drawing the focus to Qatar, a large amount of infrastructure, stadiums, housing etc. need to be put in place as it prepares for the world cup to be hosted in 2020. The supply challenges that are anticipated are evident and in this regard the rest of the region is likely to benefit immensely from this. UAE ‘will see a steady increase in investment in publicly funded projects and also to a lesser extent the privately funded projects. Take this for instance, though recent investments in Dubai hotels have been firmer, the hotel occupancy reached 81.8% in 2011 driving further investment in the tourism sector.

Beyond the Gulf opportunities exist, but only for those willing to commit and see their investment through their respective cycles. The wider Middle East region has dynamic investment opportunities with Iraq and Libya being some of the two most outstanding examples in that area. Construction of Housing in Iraq is on the rise and ministers and other government officials have been invited investor to participate in the construction. Competition for the traditional American contractors has been very stiff and in this regard, Far East powers like Korea have been pushing hard into the market with a competitive edge in their pricing. Therefore, it implies that the Western Countries have to come to speed with themselves and the kind of quality they are going to offer in order to stay in the loop as top contract holders in this region.

Western economies that are heavily indebted, this can be a way to raise and recover from such a situation considering the Middle East is highly liquid because of its trade in oil. Conclusively there are challenges that are brought about by investment, in spite of the political risks of the Middle East, and it is a matter of cost and benefit analysis of the investment but the opportunities are there.

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