As the downturn deepens, can a focus on quality and sustainability help the region’s contractor community beat the construction crunch?

Without doubt, the global credit crisis has had a sobering impact on the Gulf economies. The collapse of the property market has seen some US$1.9 trillion worth of construction projects suspended across the region since last October, and left major parts of the industry in turmoil. “We are faced with a dramatically different scenario and a whole set of new management challenges,” conceded Graham McCraig, General Manager at Dutco Balfour Beatty, at a recent conference in Abu Dhabi. “The reality is that there is not the volume of work. We have got to focus on quality turnover and quality clients – we have to take a reality pill and understand that the volume isn’t there.”

But while the region’s contractors certainly face some difficult challenges in dealing with the fallout from the nosedive in Dubai’s speculative property developments, the mood in the Gulf is surprisingly upbeat. For one thing, growth in markets such as Qatar, Abu Dhabi and the investors’ current favourite, Saudi Arabia, is strong and offers significant opportunities for developers.

And whereas Dubai’s real estate boom relied on international rather than local customers wanting luxury developments, developments in Abu Dhabi and Saudi Arabia in particular are based on local demand for more affordable housing – making them a safer long-term bet in the eyes of many industry insiders. “Private financed projects were leading the game in 2008 until the financial crunch,” Fatima Obaid Al Jaber, Chief Operating Officer of Al Jaber Group, recently told delegates at the Arabian World Construction Summit. “Now is time for the government to stimulate the economy.”

The good news is that all three markets are committed to significant government-funded infrastructure development programmes over the next few years. Saudi Arabia alone has pledged a whopping US$400 billion to develop its transportation, education and health networks, and it is a similar story elsewhere around the Gulf with both Qatar and Abu Dhabi looking to invest heavily in infrastructure.

The key for architects, developers and contractors will be to focus not only on building quality into each project, but to think more about the long-term future of the projects they design and build. Sustainability must be the watchword, as Stephen Oehme, Head of Sustainability at international advisory and design firm Hyder Consulting Middle East explains: “Sustainability is the best approach to access real quality, reduce appropriate costs and provide a hedge against the effects of the global financial crisis.”

That’s something we can all see the value in.