AECOM

Africa
GDP from construction is expected to reach USD 11.3 billion across Africa with
South Africa accounting for USD 6.1 billion. This equates to circa 1.45 per cent
of all GDP generated from within the South African economy. Following South
Africa, Tanzania accounts for USD 2.3 billion of the overall construction market
(3.38 per cent of GDP). Nigeria accounts for a further USD 1.3 billion (0.29 per
cent of GDP), with Kenya contributing USD 1.2 billion (1.09 per cent of GDP).
The construction markets of Zambia and Ghana make up the remaining output.

In recent years, Africa’s economies globally in terms of goods and services. This
economies have generally increased GDP. Africa’s growth has consequently created
remained resilient. Sound is further helped by several East jobs that are needed for an
macroeconomic policies African countries contributing increasing younger population.
have enabled the continent collectively through increased A developing industrial sector
to remain close to expected exports and cross-border trade on the continent will require
growth projections, however, to grow the region’s economy. more infrastructure investment,
it is projected that growth will particularly in power, water and
decline to 3.7 per cent in 2022, There is an ever-growing need transportation services that are
according to World Bank, Global to finance infrastructure on the already over stretched.
Economic Prospects (2022). continent. Several countries
are now prioritising this, Economies within the region
Africa’s overall economic recognizing the importance are projected to grow by an
performance remains one of of industrialisation to not average of 3.9 per cent across
the fastest growing continents. only maintain growth in their 2023-2024, as predicted by
Ethiopia, Ghana and Côte d’Ivoire economies, but to also diversify the World Bank.
are three of the fastest growing through the exportation of

Africa GDP GDP from Construction USD Bn

Nigeria 441
0.2 1.3
South Africa 420 Nigeria
Kenya 2.3
110 South Africa
Ghana 78
Kenya
Angola 73 0.0
Tanzania 68 0.2 Ghana
Zambia 21 1.2 Angola
0 100 200 300 400 500 Tanzania
USD (Bn) 6.1 Zambia
GDP USD (Bn) 2022f

Source: IMF, Trading Economics, World Bank Source: IMF, Trading Economics, World Bank

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Middle East Property & Construction Handbook 2023

Asia
GDP from construction is expected to reach USD 111.3 trillion across Asia with
China accounting for USD 823 billion. This equates to circa 4.64 per cent of
all GDP generated from within the Chinese economy. Following China, Japan
accounts for USD 215 billion of the overall construction market (4.35 per cent
of GDP) and India accounts for a further USD 32 billion (1.01 per cent of GDP).
Indonesia accounts for USD 18 billion (1.52 per cent of GDP), with South Korea
contributing USD 16 billion (0.89 per cent of GDP). The construction markets of
Malaysia, Kazakhstan and Cambodia make up the remaining output.

Like most regions across the
globe, economic activity across
Asia is expected to fall back
during 2022, for similar reasons
witnessed across other regions.
Like Latin America, the Asian
region has experienced a limited
direct impact from the conflict
in Ukraine due to the low levels
of trade between the regions.
However, the impact of rising
food, energy and financing costs,
together with the worsening fears
of a global recession, has been
seen across the continent. It is
projected that growth will decline
to 6.8 per cent in 2022, according
to World Bank, Global Economic
Prospects (2022).
The region is facing downside
risks in the form of job losses,
resulting from the financial
constraints impacting the
wider economy, and more
significantly, the impact of the
rising cost of debt servicing, a
consequence of rising interest
rates. It is understood that further
increases in commodities will add
further to the increasing cost of
food supply across Asia. Another
specific risk within the region
relates to energy dependency
as many economies are reliant
on importing energy from other
economies that are facing the
same challenges of rising prices
and supply constraints.
As noted from a recent RICS
Global Construction Monitor
publication, the construction
activity index for India
remains strong.
General activity in Malaysia
remains stagnant, however,
of notable interest is that
activity within the Malaysian
infrastructure market is showing
signs of double-digit growth,
which would indicate that other
market sectors in Malaysia
are in decline. Looking closer
at the Chinese market, which
represents the largest market
in the region, it is noted that
market activity has fallen
back significantly, mainly due
to prolonged coronavirus
lockdowns during 2022.
Despite, the persisting local and
global challenges the economies
within the region are projected to
grow by 5.8 per cent in 2023, as
projected by the World Bank.

Asia GDP GDP from Construction USD Bn

18 3 4
China 17,734 16 2
32 China
Japan 4,937
India 3,173 Japan
South Korea 215
1,799 India
Indonesia 1,186
South Korea
Malaysia 373
Kazakhstan 191 Indonesia
Cambodia 27 Malaysia
0 5,000 10,000 15,000 20,000 823 Kazakhstan
USD (Bn) Cambodia

GDP USD (Bn) 2022f

Source: IMF, Trading Economics, World Bank Source: IMF, Trading Economics, World Bank

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 AECOM

Australasia
GDP from construction is expected to reach USD 28 billion across Australia and
New Zealand, with Australia accounting for USD 25 billion. This equates to circa
1.62 per cent of all GDP generated from within the Australian economy. The
remaining output value of USD 3 billion relates to the New Zealand market, which
accounts for 1.20 per cent of total New Zealand GDP.

Following the establishment
of a USD 11.2 billion National
Reconstruction Fund, the
Australian construction industry
is expected to benefit from
increased activity through the
provision of finance. This is in the
form of loans, equity investment
or guarantees across various
sectors with the aim of achieving
sustainable growth. As a result,
the Australian construction
industry is expected to grow
by 4.3 per cent during 2022
before moderating at 2.3 per
cent from 2023-2026, according
to Business Wire.
The government of New Zealand
introduced the National Land
Transport Programme which is a
USD 24 billion plan for the period
of 2021-2024. The programme is
aimed towards the creation of an
improved transportation system
serving the country.
Included within the plan
are public transport, road
maintenance and improvements
and walking/cycling routes.
In addition, the market is
active with on-going energy,
infrastructure and residential
projects. As a result, the New
Zealand construction industry
is expected to grow by 10.8 per
cent during 2022, according
to Business Wire.

Australasia GDP GDP from Construction USD Bn

3
Australia

New Zealand
Australia
New Zealand
0 500 1,000 1,500 2,000
USD (Bn)

GDP USD Bn 2022f 25

Source: IMF, Trading Economics, World Bank Source: IMF, Trading Economics, World Bank

23
Middle East Property & Construction Handbook 2023

International construction cost inflation

International Construction Cost Indicators

20% 18%
Quarter y-o-y % change

15% 12%
14%
12%
9%
10% 10%
6%
7%
5% 4%

0%

-5%
2018 Q2 Q3 Q4 2019 Q2 Q3 Q4 2020 Q2 Q3 Q4 2021 Q2 Q3 Q4 2022 Q2 Q3
2018 2018 2018 2019 2019 2019 2020 2020 2020 2021 2021 2021 2022 2022

UAE Hong Kong UK Euro area 19 Singapore USA India Australia

Source: Based on AECOM Indices for UK, UAE; ENR USA Construction Cost Index; Singapore Building Construction Authority,
Hong Kong Architectural Services Dept (Public Sector), Euroarea Eurostat Construction Output Index, India CIDC Construction
Cost Index, AIQS Building Cost Index.

24

As building costs soar and
economic uncertainty
continues, double figure
construction cost increases
have been seen globally in
2022. The adjacent graph is a
representation of quarter-on-
quarter changes in construction
costs across several
construction cost indices in
differing locations.
What this graph demonstrates
is that the effect of construction
inflation began to be felt
internationally towards the
beginning of 2021. This is around
the time when the outfall of the
pandemic induced economic
and supply restrictions began to
hit market pricing.
Surges in prices are expected
to be subdued in 2023, and
while construction output is
still rising overall, the industry
is seeing greater fragmentation
in output and activity speeds
across nations.
AECOM
New and existing projects and projects, the ripples flowing
are feeling the effects of this from this fiscal event is expected
new, higher cost of purchase to continue in the construction
environment. New projects industry for some time.
are beginning to see viability
and budget setting processes
affected, especially those
marginal projects already
grappling with the high inflation
landscape. Capital-intensive
projects are likely to face
greater hurdles given the risks
associated with new-build
projects and the ongoing
pressures on budgets that
are applicable to both public
and private sectors. Projects
that are more advanced are
expected to be less affected as
major purchases are typically
As building costs
in place and project viability
established. However, funding
soar and economic
uncertainty continues,
and budget pressures in other
aspects may lead to spill-overs double figure
into existing projects and their construction cost
funding phases. Combined
with the harmful effects of
increases have been
seen globally in 2022.”
inflation on existing budgets
25
Middle East Property & Construction Handbook 2023

02
MENA market
review
IN BRIEF
28 32 42 50
MENA MENA KSA review Tender Price
economic construction Index (TPI)
review market review

26
AECOM

27
Middle East Property & Construction Handbook 2023

MENA economic
review
As of Q3 2022, the International Monetary Fund (IMF)
forecasted the Middle East and North Africa (MENA)
regions’ GDP to grow by 4.95 per cent for full year 2022.
This represents an increase from 4.49 per cent reported
in 2021, indicating a continued increase of economic
activity and recovery post-coronavirus. Despite this,
the overall MENA region continues to have an uneven
recovery across its markets and countries, reinforced by
the factors affecting global economies and by the disparity
of available fiscal stimulus between oil importing and
exporting countries.
In the Middle East, Saudi it is allowing for greater fiscal The graph on the adjacent
Arabia, the United Arab flexibility and confidence page shows the MENA GDP
Emirates (UAE), Qatar, Oman, in investment and the growth rate in comparison
Bahrain, Iran, Iraq, Syria, funding of diversification to emerging markets and
Kuwait and Yemen, account efforts across the developing economies.
for approximately 48 per GCC member states. This is also tracked against
cent of the world’s proven the overall world economy
oil reserves and circa 38 per In contrast, the Middle from 2015 and forecasted
cent of natural gas reserves. Eastern oil importing to 2025. According to the
These countries are known countries such as Egypt, IMF, the MENA region’s
as oil exporting countries Jordan and Lebanon are GDP is expected to
and during periods of high under substantial economic maintain its growth levels
oil prices (e.g. 2021-2022) burden in comparison between 2022 and 2025.
their economic outlook to their oil exporting
becomes bolstered as fiscal counterparts. Despite this, Although MENA’s economic
surpluses are created and Egypt’s economic outlook recovery has continued
they become somewhat has remained positive, throughout 2022, the
sheltered from the largely due to structural and slowing global economy,
economic risks attributed economic reforms made increased commodity prices
to the rest of the world. pre-coronavirus, as well as furthered by the war in
This fiscal surplus provides continued investments in its Ukraine and the tightening of
considerable easing in infrastructure and mega- global financial conditions,
terms of economic recovery projects. This is despite has caused outlooks to
and with the current and the concerns of food remain subdued for 2023.
continued high oil prices security, inflation and foreign
at the centre of the Middle exchange challenges.
East’s growth,
28
 AECOM

World, EMDEs and MENA, GDP growth at constant prices

8

6
y-oy change %

-2

-4
2015 2016 2017 2018 2019 2020 2021 2022e 2023f 2024f 2025f 2026f

World EMDEs MENA

Source: IMF, World Economic Outlook Database, October 2022

Selected MENA countries, GDP growth at constant prices

8%
6%
4%
y-oy change %

2%
0%
-2%
-4%
-6%
2015 2016 2017 2018 2019 2020 2021 2022f 2023f 2024f 2025f

MENA Saudi Arabia UAE Qatar Bahrain Egypt

Source: IMF, World Economic Outlook Database, October 2022

Budget balance % GDP for selected MENA countries

15%
Budget balance % of GDP

10%
5%
0%
-5%
-10%
-15%
-20%
2019 2020 2021 2022f 2023f

Saudi Arabia UAE Qatar Bahrain Egypt

Source: Haver Analytics, National Sources, Emirates NBD Research July 2022

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Middle East Property & Construction Handbook 2023

2022 MENA country statistics

Below is a reference to key data for MENA countries in 2022. It presents statistical growth and forecasts
for 2022, and in some instances, through to the end of the review period 2027. The table identifies the
country’s GDP value, import and exports against GDP and population growth.

Algeria Bahrain Egypt Iran Iraq Jordan Kuwait Oman Qatar KSA UAE

Land area,
2,381.7 0.8 995.5 1,628.8 434.1 88.8 17.8 309.5 11.6 2,149.7 71.0
‘000 km2 (1)

Abu
Capital city Algiers Manama Cairo Tehran Baghdad Amman Kuwait Muscat Doha Riyadh
Dhabi

Population,
45.1 1.5 104.1 85.7 42.2 10.3 4.8 4.6 2.7 36.2 10.5
million, 2022f (2)

Population growth,
CAGR 2022- 1.4 2.1 2.0 1.0 2.6 0.2 1.7 3.2 -1.2 2.0 1.6
2027 (CAGR %) (2)

GDP, USD, billion,

187.2 43.5 469.1 1,973.7 282.9 48.1 183.6 109.0 221.4 1,010.6 503.9
current, 2022f (2)

Real GDP growth

3.7 2.4 5.6 2.0 8.3 1.4 7.7 3.4 2.4 6.6 4.1
(2021-2022), % (2)

Real GDP growth,

2021-2026 0.9 2.0 4.8 1.0 1.3 2.3 1.6 1.5 1.7 1.9 3.0
pa forecast (2)

GDP/ Capita
4,151 28,692 4,504 23,034 6,696 4,666 38,123 23,542 82,887 27,941 47,793
(PPP), USD, 2022f (2)

Net lending/
borrowing, -12.3 -4.7 -6.2 -4.2 11.1 -5.9 14.1 5.5 12.5 5.5 7.7
2022f % of GDP (2)

Volume of imports
of goods &
-2.9 0.8 5.2 6.5 - 8.6 20.3 11.6 3.4 1.9 12.8
services, %
of GDP (2)

Volume of
exports of goods
-0.2 3.5 27.1 13.7 - 16.0 12.2 11.0 3.6 10.6 6.1
& services, %
of GDP (2)

Account balance,
USD, billion, 11.6 3.7 -17.0 32.0 46.1 -3.2 53.3 6.7 46.9 161.5 74.2
current (2)

Unemployment rate,
% of total - 5.5 7.3 9.4 - - - - - - -
labour force (2)

Source: (1) World Bank (2) IMF

30