Significant investment in Oman's commercial construction segment presents upside to our industry forecast. The country's burgeoning tourism sector remains one of the key areas of economic growth, with developers showing strong interest in luxury hotels and resorts. In addition, Oman has significant potential to gain a bigger share of the MICE industry (meetings, incentives, conferencing, exhibitions) with its new US$1.5bn Convention and Exhibition Centre, which is now under construction. Developing both the tourism and the MICE industry will allow the country to diversify its economy away from reliance on oil export revenues while supporting construction and infrastructure industry growth.
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After fairly volatile growth in the last decade, we currently forecast stable annual average industry growth of 5.2% between 2014 and 2022. If construction projects continue to be tendered and secure financing, we may upwardly revise our forecast in the coming months.
Two key projects have been awarded to Carillion, the British construction firm that continues to expand its operations in Oman. The first contract involves package two of the Oman Convention and Exhibition Centre. This US$176mn contract includes the construction of a car park for 4,200 vehicles, 22,000 square meters (sq m) of exhibition halls, an energy centre and an electrical substation, a waste management building, a security screening facility and other auxiliary infrastructure. Construction of package two is expected to take twenty months - with the Convention Centre's deadline for completion in 2016.
The second project to be undertaken by Carillion is the US$148.7mn Kempinski Wave Hotel in Muscat. This 40,000 sq m beach resort will be equipped with a 309-room five star hotel and 77 hotel apartments. Construction is expected to be completed in Q4 2015.
In addition, the construction of a new mall has been awarded to Al-Futtaim - the Dubai-based group. The new leisure and entertainment centre is expected to be the largest retail hub in Muscat. Its location next to the new Convention and Exhibition Centre and its proximity to the capital's International airport align with the country's aim of becoming a major tourist destination in the region.
Last but not least, Renaissance Services - an Omani firm - is planning to build an US$108mn facility to house workers. This 192,000 sq m project in Duqm economic zone will accommodate 16,000 employees. This facility is designed to cater to the growing demand for workers accommodation at the port. The project has received 39 expressions of interest (EoIs) and tenders are expected to be issued by the end of October 2013.
These announcements generate further momentum for Oman's construction industry and contribute to the country's Vision 2020 development plan. In addition, with Oman having attracted foreign construction firms, this has reinforced confidence in the market, which currently ranks fifth out of fourteen in our Risk & Rewards Ratings for the Middle East. With a large number of companies in the market and a comparatively transparent tendering process, we anticipate further foreign investment to flood into the Omani construction industry.