(MENAFN - The Peninsula) There is a growing optimism in the Gulf construction market in 2014 with major projects on the horizon such as FIFA World Cup and Expo 2020, despite concerns on financial flow and lack of skilled workers.
The Sixth Annual GCC Construction Survey by international law firm Pinsent Masons found that 90 percent of companies perceived there to be greater optimism in the market, with 77 percent reporting a healthier order book for the next 12 months in comparison to the previous year.
However, 96 percent of respondents, which included some of the region's largest contractors, developers, consultants, and other stakeholders, said that the cost of capital for projects was either as expensive (43 percent) or more expensive (53 percent).
"Qatar continues to attract major investment due to the wealth of opportunities ahead of the 2022 World Cup and several major infrastructure projects to be procured as part of the Qatar National Vision 2030," said James Elwen, Head of Office at Pinsent Masons in Qatar.
Responding to questions about operating in different regional markets, 70 percent of companies said the pace of market growth in Qatar had disappointed in 2013, while 73 percent said Abu Dhabi had disappointed.
Despite the view on Abu Dhabi, the vast majority of firms (96 percent) said the UAE is the easiest market to do business within the region.
Commenting on the results, Sachin Kerur, Head of Gulf Region at Pinsent Masons, said: "A number of major projects on the immediate horizon, such as Expo 2020 and the Qatar World Cup, have added a real sense of momentum. However, it is important to address the issues surrounding finance. They also tell us that their margins are being squeezed due to rising production costs and inflationary pressures."
Cash flow was cited as a major concern, with 62 percent of companies complaining of longer payment periods, although this is a reduction from the 78 percent of companies, who expressed concern over the issue in the previous year's survey.
"It is interesting that the proportion of respondents to our survey who expect to be involved in Public-Private Partnerships (PPP) has doubled relative to the previous year's results, reflecting an increasing recognition that this will be an important part of the mix in years ahead," said Kerur.
The survey also said the lack of skilled workers was cited as a major drag on growth. It said there is a need for the GCC's educational institutions to do more to meet the skills requirements.
Survey said construction projects in the transport sector are expected to offer the greatest opportunities in 2014 with real estate comes second most promising sector