Latest RICS Study Points to Positive Prospects for Middle East Construction
The Royal Institution of Chartered Surveyors (RICS) have released their latest quarterly study of industry sentiment, with results indicating that workloads are on the rise despite challenges surrounding material costs and labour shortages.
The RICS survey is an expansive and respected gauge of professional opinion on the state of the industry. We covered the Q2 2021 results in a recent blog, and our global recovery from COVID appears to have progressed significantly since then.
2458 global company responses were recorded for the Q4 study, and we have summarised some of the headline points for our latest blog. Results are expressed according to a global Construction Activity Index (CAI), which is a “…weighted composite measure encompassing variables on current and expected market activity as well as margin pressures.”
MEA: A Sustained Uptick for Five Consecutive Quarters
Results show that headline activity across Middle East and Africa is once again expected to increase, for the fifth consecutive quarter since Q4 2020. An overall Construction Activity Index of +20 was recorded for Q4 2021, a strong recovery from the -11 metric that was noted in Q4 2020.
Survey participants mostly expect infrastructure workloads to grow in the coming twelve months, with a net balance percentage of +52% recorded. Private non-residential and private residential workloads are also projected to rise, with strong metrics noted of +38% and +32% respectively.
Expected profit margins also recorded a +23% net balance across MEA for Q4 2021, a large upswing from the +6% result for Q3 2021. Growing profit margins are not a common theme globally, which speaks to the resurgent local confidence in the MEA region.
In terms of industry challenges, a high number of MEA respondents cited financial constraints (83%) and material costs (81%) to be negatively impacting the local industry. At a global level, only 63% of respondents thought that financial constraints were weighing heavily on local activity.
Strong Projections for Saudi Arabia
The Kingdom of Saudi Arabia recorded the highest Construction Activity Index of any single country for Q4 2021, with a reading of +60 compared to an already strong +54 in Q3.
Particularly high metrics were recorded for workload growth, employment expectations and profit margin expectations. The Saudi Vision 2030 strategic framework was regularly cited by respondents as a driving force for growth of the local industry, even though projects are still under master planning stages for the most part.
Workloads on the Rise Worldwide
It’s not just in the Middle East that positive sentiment is growing, as far as industry workloads are concerned. Global net balances for infrastructure, private residential and non-private residential workloads all rose from Q3 to Q4. Perhaps the most notable metric for a single region was in Europe, where a +54% net balance was recorded for private residential workloads, compared to a global average of +22%.
As for common challenges faced by the global industry, material cost pressures have once again been highlighted with 86% of respondents citing the issue. A growing number of those surveyed also think skills shortages are a pressing problem, with 67% noting the issue compared to 58% in Q3 2021.
These are just some of the headline takeaways from the full Global Construction Monitor for Q4 2021, which can be viewed here. In general, the study shows that our industry continues to march on positively despite widely felt challenges.
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