Construction Industry
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CONSTRUCTION INDUSTRY
Introduction:
Construction industry in Oman like most of the GCC countries is enjoying the boom. The huge rise in oil prices during 2003 to 2008 enable the construction industry to rise to its peak due to effort of Omans government to diversify oil based economy more to sustainable economy. This strategy of economy diversification led the government of Oman to invest heavily on infrastructure which not only include construction of roads, airports and railway tracks but also includes a lot of tourism projects as well as construction of commercial and private buildings.
The data published by Oman Ministry of National Economy shows that the construction industry has grown by 34.7% in 2007 when compared with 2006. The growth in construction sector is most likely to continue due to increasing oil prices in world market as oil and gas sector accounts 49.7% of Omans economy. However due to the global economic crisis of 2008 as well as fall in oil prices during that period slowed down the growth of construction industry in Oman but due to steady recovery of Oman the construction sector started to grow at rapid pace again. This growth will increase furthermore due to significant increase in Oman population and huge amount of government spending on infrastructure projects.
2. Economic Trends, Patterns and Consistencies
The trend, pattern and consistencies of economic environment are discussed in this section. Oman economy is continuing to grow swiftly. According to the eight five year development plan published in 2011 which aims to achieve the average economic growth rates not lower than 3% and to increase the investment by 113% compared to previous plan periods. Furthermore oil revenues during the period of 2011 to 2015 are forecasted to reach R.O 25.5 billion, which is 100% more compared to the oil revenues in the past plan period of 2006 to 2010. Government revenues generating from activities other than during the period of 2011 to 2015 are also expected to be approximately R.O 12 billion which again is 109% more compared to the revenues generated during the period of 2006 to 2010. Similarly an increase in government revenues to by approximately R.O 37.5 billion to finance government projects which again is 101% increase when compared to past plan. This clearly shows that government will be having more revenues to spend on infrastructure projects which will allow the construction industry to grow more and more.
Due to the recession in 2008-09 which had severe effect on GCC economies the construction sector also got effected. However construction sector is starting to recover but the growth of construction sector in some of GCC countries is still far away from pre-crisis level. The growth of construction sector is not even among all the GCC countries. Qatar construction market growth forecasts looks the most optimistic due to strong GDP growth and successful bid to host 2012 FIFA world cup. Similarly in Saudia Arabia and Bahrain the construction market is also growing due to government focus on providing cost efficient homes to poor and low income people.
Construction industry in Oman and GCC region continues to grow and flourish compared to more mature markets of Europe and US due to strong GDP and high oil prices. According to construction growth summary, the growth of the construction industry in Middle-east and Africa is approximately 5% whereas in US and Latin America and Asia it is 6% but in European markets the construction industry growth is declining by 2%.
Social Trends, Patterns and Consistencies:
According to trading economics, population of Oman is increasing with each subsequent year. Population of Oman in January 2001 was 2.19 million whereas the population in January 2013 is expected to be 3.31 million. This growth in population represents the increase in demand of new buildings, roads and other basic infrastructure needs. Furthermore most of the Omanis families do not prefer joint family systems which further prove an increase in demand of new residential units. It clearly shows that the population of Oman is increasing with each coming years.
According to the index mundi the median age of people in Oman is 24.7 years and the average age of Omanis to get married is 24 years and almost 65 percent of Omani population is between 16-45 years old. Hence by analyzing this data one can predict the golden period for the construction industry in future. Furthermore the literacy rate of Omani population in 2003 was 96.7% which increased to 97.6% in 2008. With this increase in literacy rate more and more people are getting aware of green buildings and hence demand of green building is expected to rise in Oman.
GCC population also saw an increase at a rapid pace. The population of all GCC states which includes Saudia Arabia, UAE, Bahrain, Kuwait, Qatar and Oman reached approximately 46.8 million from 33.2 million in 2004 and this population is expected to hit more than 50million in 2013. The more the population increases the more the demand of the houses will be as well as infrastructure has to be further developed.
According to the recent statistics, the world population in 2012 was approximately 7 billion and it is expected to reach 8 billion mark in 2025. With the increase of population the demands for new building, hospitals, schools and other basic infrastructure needs is also going to rise.
Technological Trends, Patterns and Consistencies:
Technological trends, pattern and consistencies are discussed in this part. Construction materials such as cement, blocks, concrete required for the construction projects are mostly produced within the country. The technology used to prepare these materials is not up to the standards and hence an upgrade of technology is required not only in manufacturing construction material but also in different construction activities. Furthermore the use of cutting edge and latest technology will not only enhance the quality of the materials produced but it can also enhance the productivity capacity of different manufacturing plants which manufacture these construction materials.
Another important technological trend noticed in Oman is the rare usage of ready mix concrete. Concrete production at the site requires a lot of time and sometime the quality is not up to the standard. Use of ready mix concrete will not only assure better quality but it also saves time, site storage space, reduces plant and machinery hiring at site as well as reducing the wastage of basic materials, dust and noise at site. This can improve the speed at which construction works and infrastructure