© 2013 MEED Insight

25 May 2016, Dubai

Presented by Ed James

Director of Content and Analysis, MEED Projects

edward.james@meed.com

@EdJamesMEED

Outlook for the GCC projects market

Challenges, opportunities and key projects

© 2013 MEED Insight

All the project information in this

presentation is sourced from MEED

Projects

MEED Projects is a Middle East, North and East Africa project tracking platform. It has

two major functions; it is a business development tool to help you find new business

opportunities and an analysis tool so you can assess the feasibility of potential new

markets and projects.

5 key reasons to sign up for a demo:

• Identify new business opportunities from over 10,050 active projects worth over $4.1 trillion

• Improve performance in current markets and evaluate new markets with 20 countries covered

• Build the right company relationships using our database of over 11,200 companies on live projects

• Target over 18,000 key decision makers ahead of your competitors

• Forecast market developments by country and project type to inform your strategic planning

© 2013 MEED Insight

-

2

GCC Macroeconomic Review1

3 Source: FT

Average oil price 2013-2015 ($ a barrel)

© 2014 MEED Projects

The oil price – the new paradigm

© 2014 MEED Projects

WTI started the year trading at $39 a barrel. Currently, it is pricing at $31.

4 © 2014 MEED Projects© 2014 MEED ProjectsSource: IEA

The result – major deficits

145.8

137.2132.6 130.2 129.7

113.2 109.4

73.665.3 62.8

0

20

40

60

80

100

120

140

160

180

200

Libya Iran Algeria Bahrain Iraq Oman SaudiArabia

UAE Qatar Kuwait

$ price barrel budgets are based on

20142015

5 Source: MEED Projects; *Kuwait budget runs April-March

Budgeted expenditures comparison 2014-16 ($bn)

© 2014 MEED Projects

Budgeted expenditures largely stable

© 2014 MEED Projects

227

30.9

13.2

64.8

12.6

54.7

0

50

100

150

200

250

Saudi Arabia Oman UAE Kuwait* Dubai Qatar

2014

2015

2016

6 © 2014 MEED Projects

BUT – many weapons in the GCC arsenal

© 2014 MEED Projects

Firstly, the correlation between oil prices and project spending is not as close as

everyone believes

And GCC states could:

Privatise or part privatise state assets i.e. Aramco

Sell landbank

Introduce sales tax

Lift subsidies and tariffs

Drop oil output!

Don’t believe all the doomsayers!!

7

Regional Project Marker Growth Drivers & Barriers to Growth

Negative factors

Positive factors

Strong government

fiscal reserves and

stable budgets

Localised

drivers/World Cup

and Expo

Demographic

Growth

Political

Commitment to

Invest in Domestic

Infrastructure 2 3

1 4

Reluctance of

Clients to Push

Ahead with Projects

Wider economic

impact i.e. on real

estate

Political & Social

InstabilityCollapsing revenues

2 3

1 4

© 2014 MEED Projects

Positive and negative factors

© 2014 MEED Projects

© 2013 MEED Insight8

GCC Projects market2

9 © 2014 MEED Projects

Market Analysis by Country

© 2014 MEED Projects© 2012 MEED Insight

Value of GCC contract awards by country, 2008-14

Source: MEED Projects

2229

25355

14829

29695

41989

56453

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Bahrain Kuwait Oman Qatar Saudi Arabia UAE

2008

2009

2010

2011

2012

2013

2014

Market Analysis by Sector

10

Value of GCC Contracts Awarded by Sector, 2008 – 2014 ($m)

Source: MEED Projects© 2014 MEED Projects

2008

2009

2010

2011

2012

2013

2014

1845

68896

5716 4311

28290

18209

36021

7262

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Chemical Construction Gas Industrial Oil Power Transport Water

$m

1.5

27.4

13.7

28.9

59.0

42.5

172.9

0

20

40

60

80

100

120

140

160

180

200

Bahrain Kuwait Oman Qatar Saudi Arabia UAE GCC

Pro

jec

t a

ward

s (

$b

n)

MEED Forecast for GCC Contract Awards, 2015 ($bn)

Source: MEED Projects. Note: forecast is made based on hard data analysis of project pipeline in each country

GCC Projects Market:

January 2015 forecast

1.5

27.4

13.7

28.9

59.0

42.5

172.9

3.2

31.5

13.6

29.3

49.8

37.4

164.8

0

20

40

60

80

100

120

140

160

180

200

Bahrain Kuwait Oman Qatar Saudi Arabia UAE GCC

Pro

jec

t a

ward

s (

$b

n)

2015 Forecast 2015 Act

MEED Forecast for GCC Contract Awards vs. actual, 2015 ($bn)

Source: MEED Projects. Note: forecast is made based on hard data analysis of project pipeline in each country

GCC Projects Market:

2015 market performance vs. January 2015 forecast

MEED Forecast for GCC Contract Awards, 2016 ($m)

GCC Projects Market:

2016 contract award forecast

2,810

24,363

13,451

22,253

40,761

36,513

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Bahrain Kuwait Oman Qatar Saudi Arabia UAE

Pro

ject

aw

ard

s (

$m

)

Total = $140bn

Source: MEED Projects. Note: forecast is made based on hard data analysis of project pipeline in each country

2016 YTD performance

14

Value of GCC contracts awarded Q1 2016

Source: MEED Projects© 2014 MEED Projects

1705

4861

4001

1673

7233

10080

0

2,000

4,000

6,000

8,000

10,000

12,000

Bahrain Kuwait Oman Qatar SaudiArabia

UAE

Contr

act

aw

ard

s $

m

Total = $30bn

Dubai largest contracts awarded Q1

© 2014 MEED Projects

Project Value ($m)ICD - Palm Jumeirah: Royal Atlantis Resort & Residences, Phase 2 840

Emaar Properties / Dubai Holding : Dubai Creek Residences : Phase 1 650

Indigo Properties - Indigo Zen 409

Nakheel - Palm Jumeirah : Palm Gateway (Tender No. DMS 141324) 386

ICD-Brookfield Management - DIFC : ICD Brookfield Place 370

Al Wasl - Mandarin Oriental Jumeirah Beach Club Resort 190

Dubai Islamic Bank - Badr Project (Madain Al Emarat) : Phase 1 188

Dubai RTA - Intersection in Karama Area (Contract No. R1013/1 ) 166

MOPW - Upgrading Of Mleiha Road From Sheikh Khalifa Road : Phase 1 140

Omniyat / Drake & Scull - One at Palm Jumeirah 136

DEWA - Supply and Installation of Water Pipelines (2131500016): Section B

& C 128

GRDI - Downtown Dubai : HSBC Bank Headquarters 127

Dubai RTA - Business Bay : Parallel Roads Corridor (Contract No.

R881/282) 121

Meydan Sobha - MBR City : District One: Phase 3 80

Damac - Business Bay : Majestine Allure 80

Union Properties - Motorcity : Oia Residences 64

Al Tayer Group - Meydan City : Al Manzel 1 & 2 56

Dubai RTA - Development of Al Awir Road and International City Accesses 52

DEWA - Supply and Installation of Water Pipelines (2131500016): Section A 51Source: MEED Projects

Qatar contracts awarded Q1

Source: MEED Projects© 2014 MEED Projects

Contracts awarded in Qatar 2016 year to date

Project Sector Value ($m)

Qatar Primary Materials Company - Bulk Materials Handling System (MP-13-

BMHS) Industrial 325

QP- Strategic Petroleum Products Storage Project: Pipeline Oil 180

QP- Strategic Petroleum Products Storage Project: Storage Tanks Oil 180

QP- Strategic Petroleum Products Storage Project: Receiving Facility Oil 180

Al Mana Group - Al Mana Tower (Burj Al Mana) Construction 158

QF - Education City: Qatar International Golf Club Construction 120

ASHGHAL – IDRIS(Package1):Lateral Interceptor Sewers: LIS 1 Water 90

Daruna Development - Integrated Accommodation Facility Construction 40

LREDC - Lusail: Qetaifan Islands South: Spine Road Infrastructure (CP08-A1) Transport 25

© 2013 MEED Insight17

The Future3

Forecast:

Projects Pipeline - GCC

18

Budget Value of Planned & Un-awarded Projects by GCC Country ($bn)

Source: MEED Projects© 2014 MEED Projects

Forecast:

Construction Projects Pipeline - GCC

19Source: MEED Projects

Budget Value of Planned & Unawarded GCC Construction Projects ($m)

© 2014 MEED Projects

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Bahrain Kuwait Oman Qatar Saudi Arabia UAE

2017 and beyond

20

The market will depend on several factors

The oil price (obviously)

But more importantly – governments’ commitment to maintain spending in the face

of falling revenues to keep the economy moving

The speed of enacting legislation, restructuring, prioritization of project plans, and

ability to obtain funding

Contractors and the supply chain’s efforts to inform the government and support

them in accelerating the market

Time pressures on Expo2020, and the World Cup

Situation should become clearer in the second half of this year

Source: MEED Projects © 2014 MEED Projects

Conclusion

21

A real slow down in activity outside Dubai

The market is now split into two streams: good performers – Dubai, Kuwait and Oman; and poor

performers – Qatar, Abu Dhabi and Saudi Arabia

Dubai appears to be decisively tacking the oil price issue by announcing a number of new

projects and pushing ahead with its vision

On the other hand, Qatar and KSA in particular are struggling as the government is unable to

find or release funds to pay for projects

As a result it appears that this year will substantially underperform against forecast. At the

current rate, the projects market is set to hit about $120bn worth of contract awards, well down

on the $165bn hit last year

If this is the case, it could be a disastrous year for the regional projects market and it remains

to be seen whether contractors can maintain the cashflow levels needed to stay in business

and/or pay their workers unless the governments act to alleviate the crisis

Source: MEED Projects © 2014 MEED Projects

© 2013 MEED Insight© 2014 MEED Projects

25 May 2016, Dubai

Presented by Ed James

Director of Content and Analysis, MEED Projects

Edward.james@meed.com

@EdJamesMEED