{"id":39083,"date":"2016-12-27T23:36:41","date_gmt":"2016-12-27T16:36:41","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/?p=39083"},"modified":"2016-12-27T20:51:32","modified_gmt":"2016-12-27T13:51:32","slug":"year-in-review-contractors-felt-the-pinch-as-saudi-arabia-prioritised-spending","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/year-in-review-contractors-felt-the-pinch-as-saudi-arabia-prioritised-spending\/","title":{"rendered":"Year in review: Contractors felt the pinch as Saudi Arabia prioritised spending"},"content":{"rendered":"


\nMajor contractors in Saudi Arabia have suffered a terrible 2016, with the two biggest names of the sector – Saudi Binladin and Saudi Oger – being hit hardest by a government decision to halt payments to contractors on all but a handful of key projects.Saudi Binladin Group (SBG) either laid off or paid off up to 60,000 workers out of a total workforce of around 200,000. Saudi Oger, meanwhile, was almost brought to its knees by the crisis, with many workers remaining unpaid for up to a year, although money did start to filter through in the final quarter.”The reprioritisation of Saudi’s spending as a result of oil price [declines] and defence spending was a challenge,” said Simon Moon, the chief executive of Atkins Middle East.”It clearly put a lot of uncertainty into the market.”He said that although Atkins had benefited from the fact payment on major programmes such as the Riyadh Metro and on framework deals for the Royal Commission for Jubail and Yanbu continued, “liquidity is a big issue” for the sector.”We’ve had challenges at Jeddah Airport with SBG. My biggest concern going into 2017 is that some of the big programmes that Atkins would normally be very confident around – particularly the metro programmes in Mecca and Jeddah – are continuing to move to the right.”Deadlines are also being pushed back in other areas as government ministries await the introduction of new project management offices before procuring new work. Mr Moon said Akins’ deal with Saudi Arabia’s Economic Cities Authority, where it is advising on the development of four new economic cities, is effectively on hold until the required structures are in place.The BMI Research senior infrastructure analyst Richard Marshall said: “The Saudi construction sector will struggle through 2017 and only begin its path to recovery over 2018 and into 2019. The broader Saudi economy will remain weak and coupled with the ongoing liquidity crunch, private investment in areas such as real estate and industrial projects will slow.”Riad Nashif, the executive vice president at Aecom Middle East, argued that tightening liquidity was not just a feature of Saudi Arabia, stating that “slow, or no, payments to varying degrees in different countries” affected the whole supply chain. New project awards have been considerably lower, with MEED reporting this month that contract awards for 2016 “at best” are likely to total US$120 billion – 32 per cent lower than the $177bn awarded in 2015. By mid-December, contract awards for 2016 stood at just $96bn.Mr Nashif said that even on existing projects, there had been “de-scoping, suspensions and rethinking of strategies”.”These are expected with the drop in [oil] revenues. But on the positive side, I see more governance within the GCC. Things are more transparent than they used to be.”In the UAE, the market remains in positive territory, but growth has been driven both by public and private sector investments in Dubai, rather than Abu Dhabi. Views are mixed on whether this will continue into 2017. In Abu Dhabi, Mr Moon said he did not “see any indications yet that the public sector is getting to the point where major investment is coming out”, and that private sector investors are generally waiting for sentiment to improve.”There’s lots of talk about alternative financing methods across the region but I don’t see much evidence of that yet.”Mr Nashif was more positive, stating that investment is expected to grow in social infrastructure, with health care and education projects considered a priority. He also expects a revival of long-awaited projects at the Cultural District at Saadiyat Island, but for greater private sector involvement in these. “I think that the Government has recognised it is not their place to build all of these and operate them, because it is not their bread and butter.”Meanwhile, Dubai’s construction market continues to be the region’s brightest spot. Last week’s expansionary budget saw the amount allocated to infrastructure projects increasing by 27 per cent year on year. Moreover, the looming Expo 2020 deadline “is driving significant momentum into commercial building and transport infrastructure”, according to Mr Marshall. David Clifton of the Atkins unit Faithful + Gould points out that although construction is an important component of Dubai’s GDP – representing about 10 to 15 per cent of economic output – its significance to the overall GCC construction market is not huge, representing 10 per cent of total project awards. Moreover, Mr Moon argues that with the market slowing elsewhere, more firms are battling for a share of the market.”Clients realise that. Terms and conditions are becoming harder to negotiate [and] payment mechanisms are becoming more client-favourable.”mfahy@thenational.aeFollow The National’s Business section on Twitter
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\nSource : thenational.ae
\nRead more…Year in review: Contractors felt the pinch as Saudi Arabia prioritised spending<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Major contractors in Saudi Arabia have suffered a terrible 2016, with the two biggest names...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-39083","post","type-post","status-publish","format-standard","hentry","category-property-news"],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-aan","jetpack-related-posts":[{"id":28519,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/saudi-binladins-cash-flow-crisis-starts-to-ease\/","url_meta":{"origin":39083,"position":0},"title":"Saudi Binladin's cash flow crisis starts to ease","date":"October 4, 2016","format":false,"excerpt":"\r The cash flow crisis that has engulfed Saudi Arabia's biggest builder, Saudi Binladin Group, has started to ease with much-needed payments from the kingdom's finance ministry filtering through. The Wall Street Journal had reported that payments of between US$800 million (Dh2.9 billion) to $1.1bn had been made to the\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":11822,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/saudi-binladin-says-dismissed-77000-expatriate-workers-received-full-compensation\/","url_meta":{"origin":39083,"position":1},"title":"Saudi Binladin says dismissed 77,000 expatriate workers received 'full compensation'","date":"May 2, 2016","format":false,"excerpt":"\r The Saudi Binladin Group said dismissed workers received \"full compensation,\" responding to local media reports that it fired thousands without pay. It described the job cuts as a routine measure amid a slowdown in the construction industry.\"Adjusting the size of our manpower is a normal routine, especially whenever projects\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":12854,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/saudi-binladin-to-lay-off-another-14000-staff-bringing-total-departures-to-69000\/","url_meta":{"origin":39083,"position":2},"title":"Saudi Binladin to lay off another 14,000 staff, bringing total departures to 69,000","date":"May 12, 2016","format":false,"excerpt":"\r Saudi Binladin Group has confirmed that it is working on processing final payments for about 14,000 workers that will allow them to leave the company within the next month, following on from the recent departure of about 55,000 staff.The company, which had employed more than 200,000 staff before its\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":22291,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/arabtec-chief-says-situation-with-unpaid-filipino-workers-in-saudi-blown-out-of-proportion\/","url_meta":{"origin":39083,"position":3},"title":"Arabtec chief says situation with unpaid Filipino workers in Saudi 'blown out of proportion'","date":"August 8, 2016","format":false,"excerpt":"\r The chief of Arabtec Construction pledged to pay all Filipino workers employed by a Saudi joint venture contractor in full.Raja Hani Ghanma, the chief executive of UAE contractor Arabtec Construction, has said the plight of the workers had \"been blown out of proportion\".The National reported last week that the\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":168444,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/saudi-finance-ministrys-stake-in-binladin-group-to-rise-above-86-report\/","url_meta":{"origin":39083,"position":4},"title":"Saudi finance ministry\u2019s stake in Binladin Group to rise above 86% \u2013 report","date":"December 29, 2025","format":false,"excerpt":"\r Holding in the kingdom's largest construction firm increased as government seeks to stabilise a company crucial economic diversification plans The post Saudi finance ministry\u2019s stake in Binladin Group to rise above 86% \u2013 report appeared first on Arabian Business: Latest News on the Middle East, Real Estate, Finance, and\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"https:\/\/i2.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2025\/12\/construction-cranes-1000x667-1.jpg?fit=1000%2C667&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":22849,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/arabtec-still-in-the-red-but-losses-reduced-by-74-per-cent\/","url_meta":{"origin":39083,"position":5},"title":"Arabtec still in the red but losses reduced by 74 per cent","date":"August 14, 2016","format":false,"excerpt":"\r The Dubai contractor Arabtec posted its seventh successive quarterly loss for the three months to June 30, although an increase in revenue has meant the scale of its losses narrowed.The company posted a net loss attributable to its parent company of Dh186.4 million \u2014 a 74 per cent reduction\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/39083"}],"collection":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/comments?post=39083"}],"version-history":[{"count":0,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/39083\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/media?parent=39083"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/categories?post=39083"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/tags?post=39083"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}