Commercial Construction To Support Industry's Growth
Two major commercial projects support our growth forecast for Oman's construction industry. After fairly volatile growth, we now forecast stable annual average industry growth of 5.2% between 2014 and 2022. Industry growth has been strongly driven by the expansion of tourism infrastructure, with the aim of diversifying the economy away from oil exports. Tourism in Oman has been growing at many levels, including medical tourism ( see 'A Future GCC Medical Tourism Hub', 5 jun). Designed to cater for a growing number of tourists, these two projects contribute to strengthen retail and hospitality infrastructure in Oman.
|Great Potential For Growth|
|Oman's Total Tourists Arrivals, 000' & % y-o-y Growth|
The first project is a US$199mn contract awarded by the Oman Tourism & Development Company ( Omran) to the British firm Carillion. The project forms part of the Oman Convention & Exhibition Centre which has a construction value estimated in US$1.5bn. The contract involves the construction of 13 buildings, including an energy centre, exhibition halls, and car parks. Works are scheduled to start next month in order to be completed by the end of 2014.
The second project has been announced by Tilal Development who will invest US$130mn in the expansion of Muscat Grand Mall. The contract includes the addition of 100 new retail outlets to reach a total of 250 units. In addition, parking facilities will double and entertainment areas will be expanded. The project is expected to be completed in Q4 2015. With a privileged position in the Gulf and the infrastructure to offer world-class shopping and entertainment facilities, Oman could become a major tourist destination in the Middle East.
These announcements give further momentum to the growth of Oman's construction industry and contribute to the Vision 2020 development plan of the country. These projects will support the development of small and medium enterprises (SMEs) and create employment opportunities for the locals. According to the IMF, the unemployment rate among native Omanis stood at 24.4% in 2010 ( see ' Unemployment Remains Main Political Risk', 7 Mar). However, it is worth noting that a high proportion of employees in the construction sector are expatriates - according to the Central Bank 44.3% of expatriates are employed by the construction sector. Therefore, the construction boom may not actually benefit employment amongst native Omanis as much as expected.