Dubai: Sentiments in the Gulf’s construction sector are decidedly downbeat being weighed down by geo-political tensions and the low oil price scenario. In fact, just 32 per cent of respondents in a survey expressed optimism about the year ahead, against the 77 per cent that shared the sentiment at the same time last year.

This is as per the annual ‘GCC Construction Survey’ conducted by the law firm of Pinsent Masons. The majority of the companies participating in the survey were involved in projects with a value of Dh100 million and over.

Contractors expressed the highest degree of pessimism on projects in Saudi Arabia, while the UAE was rated as offering the ‘strongest market opportunity’ for 2016. But there is also considerably favourable opinion in favour of Qatar as offering the strongest regional opportunity, up from 14 per cent of respondents last year to 33 per cent this year. In comparison, just 12 per cent called themselves in favour of Saudi Arabia, and a substantial drop from the 40 per cent last year.

The UAE, meanwhile, is considered the strongest market opportunity in 2016. “It would seem that good fundamentals in many places are being obscured by the role that politics is playing,” said Sachin Kerur, the regional head at Pinsent Masons. “However, it is possible that as these issues lift there could be just as a swift a return to positivity.”

“Saudi Arabia will remain a highly attractive market. Indeed there have been some positive diversification measures discussed in the kingdom, which if implemented should enable greater private participation in the economic development of the country.

“In Qatar, they are benefiting from a natural bounce as the World Cup edges closer.”

When it comes to specific categories where they had a role to play, the sense of despondency of contractors was at its highest on opportunities in real estate. Only 26 per cent of those surveyed considered it as offering the strongest commercial opportunity next year, and down steeply from the 48 per cent who thought so same time last year.

‘This may be due to the uncertainty around oversupply in places like Dubai in particular,’ said the Pinsent Masons statement.

Across the board, ‘16 per cent said that their 2016 order books had declined by over 10 per cent, which compares to just 4 per cent a year earlier. Asked about contract conditions, 93 per cent of businesses said they had become less favourable during 2015, representing a 14 per cent increase on a year earlier.

‘In addition, 95 per cent said payment periods were longer this year, and 60 per cent said they were involved in more disputes during 2015 than had been expected before the year started.’

Another bearish sentiment that the survey found related to contractors’ possible participation in PPP (public private partnerships).

Two-thirds said they are not currently involved, or anticipating any such involvement, in PPP projects over the next 12 months. ‘With the fiscal environment under pressure across all the oil exporting economies of the region, a far healthier result around PPPs was expected,’ according to a statement by Pinsent Masons.

“These arrangements could offer a favourable solution for numerous major infrastructure and construction developments, and there have been legislative changes made to make them more accessible and attractive,” said Kerur. “It may well be that the private sector still believes more reform is needed before PPPs become mainstream.”

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•The opening of Iran in a post-sanctions environment does not cut it with Gulf contractors, at least for now. Only 40 per cent of respondents were considering pursuing opportunities there. ‘This may simply be due to a wait-and-see approach being adopted for Iran, as sanctions have not yet been officially removed,” said the Pinsent Masons statement.

•A similar sentiment has also been expressed by contractors related to future opportunities in India. This is ‘surprising given the historic trade links between the GCC and India, the strength of the economic growth being seen there, and the recent promotional visit of Prime Minister Narendra Modi to the UAE’.