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Middle East Construction Handbook 2018 - 19 - AECOM

18 19 PROPERTY & CONSTRUCTIONH andbookMiddle East12 Middle East Property & Construction Handbook 2018 /19 Welcome to the twelfth edition of the Middle East Property & Construction Handbook . We hope that you will find our assessment of the trends shaping the global and regional Construction industry of interest and this year s selection of articles and cost data of value. This year, we start off by reviewing the global macro- economic factors that categorized 2017 as a better year than 2016 for the world economy; a trend set to continue in the near term. Better than expected performance of key markets in Europe and the US supported an uptick in global economic output in 2017 and early 2018 . Increased manufacturing output in Asia also played a part. Section one contains a detailed review of these markets as well as our anticipated trends for the remainder of 2018 and into our articles section we explore three emerging trends in the Construction market.

2014 2015 2016 2017e 2018f 2019f 2020f World Advanced Economies EMDEs Source: IMF, World Economic Outlook, Apr 2018 % change y-o-y Fig. XX Growth in volume of exports of goods and services Growth in volume of exports of goods and services Real GDP growth Source: World Bank Economic Prospects, June 2018 4.2% 4.3% 4.8%

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Transcription of Middle East Construction Handbook 2018 - 19 - AECOM

1 18 19 PROPERTY & CONSTRUCTIONH andbookMiddle East12 Middle East Property & Construction Handbook 2018 /19 Welcome to the twelfth edition of the Middle East Property & Construction Handbook . We hope that you will find our assessment of the trends shaping the global and regional Construction industry of interest and this year s selection of articles and cost data of value. This year, we start off by reviewing the global macro- economic factors that categorized 2017 as a better year than 2016 for the world economy; a trend set to continue in the near term. Better than expected performance of key markets in Europe and the US supported an uptick in global economic output in 2017 and early 2018 . Increased manufacturing output in Asia also played a part. Section one contains a detailed review of these markets as well as our anticipated trends for the remainder of 2018 and into our articles section we explore three emerging trends in the Construction market.

2 We review the adoption of digital Construction tools and examine how modern Construction techniques are incorporating 3D printing and robotics into their work flows. We look at project management challenges, and the role of value and risk management. Lastly we share our thoughts on the ecology of a city, demonstrating how it is possible to design cities that complement their ecological you are new to the Middle East Construction industry, section three will provide you with insights into procurement routes, forms of contract in the Middle East and building regulation and compliance. If you are a veteran in the Middle East industry, section three will provide you with a reminder of key contract and regulatory information, a good reference to keep. The Handbook concludes with our reference section, international and regional cost data and a directory of our offices in the with previous years we continue to seek feedback in ever ything we do.

3 Please contact the editors, Marc Gibbons & Tulsi Patel via for further information. AECOM3 ICD Brookfield Place Image courtesy of ICD BrookfieldLusail Expressway Aerial view of 5/6 arches at 5/6 Interchange Image courtesy of AshghalSarat Village Image courtesy of Diyar Al MuharraqIl Primo Image courtesy of Emaar4 Middle East Property & Construction Handbook 2018 /19030506040201 Reference articlesDirectory of officesFuture of InfrastructureReference dataArticlesEconomic round up74 Procurement routes78 Middle East forms of contract83 Building regulations and compliance115 Directory of offices119 Future of Infrastructure survey92 International building cost comparison100 Regional building cost comparison102 Basis of Construction costs104 Mechanical and electrical cost comparison105 Major measured unit rates106 Major material prices107 Labour costs108 Middle East Indices110 Typical building services standards for offices111 Exchange rates112 Weights and measures40

4 Digital construction47 Project value and risk management trends in the GCC61 Ecology of a city08 Global economic review15 Global Construction projects22 MENA economic reviewContents5 AECOM6 Middle East Property & Construction Handbook 2018 /1908 Global economic review15 Global Construction projects22 MENA economic review 01 ECONOMICROUND UPIN BRIEFAECOM7 Better than expected performance of key markets in Europe and the US supported an uptick in global economic output in 2017 and early 2018 . The favorable market conditions are likely to continue in the near-medium term, however downside risks continue to outweigh upside risks in the near-medium term outlook. Protectionism, vulnerability of financial markets and global tensions are considered the most significant downside risks within the outlook. GLOBAL economic REVIEW8 Middle East Property & Construction Handbook 2018 /19A significant increase in trade levels between 2016 and 2017 contributed to the improvement in global economic forecasts for the near term.

5 According to the World Bank Group, world trade volume increased by percent in 2017 and is expected to grow by another percent in 2018 . IMF estimates a growth in exports of advanced economies by percent in 2017, well above their growth levels in 2016. The volume of exports in emerging and developing economies continued to increase at a higher rate from their 2016 levels. These positive trends are supported primarily by increased investment from advanced economies and increased manufacturing output in Asia. However, the impact of recent US tariffs may also factor in the coming periods. EconomiesEMDEsWorld trade volumeSource: World Bank economic Prospects, Jun 2018 % change y-o-y012345672015201420162017e2018f2019f 2020fWorldAdvanced EconomiesEMDEsSource: IMF, World economic Outlook, Apr 2018 % change y-o-yFig. XX Growth in volume of exports of goods and services012345672015201420162017e2018f20 19f2020fWorldAdvanced EconomiesEMDEsSource: IMF, World economic Outlook, Apr 2018 % change y-o-yFig.

6 XX Growth in volume of exports of goods and services012345672015201420162017e2018f20 19f2020fWorldAdvanced EconomiesEMDEsSource: IMF, World economic Outlook, Apr 2018 % change y-o-yFig. XX Growth in volume of exports of goods and servicesGrowth in volume of exports of goods and servicesReal GDP growth Source: World Bank economic Prospects, June : IMF, World economic Outlook, April 2018 Note: Advanced Economies - United States, Euro Area and Japan EMDEs - Emerging and developing countries in Africa, Asia and Latin AmericaAECOM9 The global composite purchasing managers index for the first quarter of 2018 indicates rising new orders and work backlogs. This movement further supports an acceleration of global economic output growth in the near term. Fiscal stimulus and structural reforms are currently under review or being implemented by many countries around the world. In the US, tax reforms and fiscal stimulus plans have helped support investments and could result in improved market sentiment within the US economy and its major trading partners.

7 To further drive investment in their countries, China and India have revised their investment policies allowing foreign companies more autonomy and opportunities to invest. Nigeria, Malaysia and Indonesia, among many other countries, have also revised laws and policies around corporate regulations and government processing time in order to create more business-friendly environments. Source: JP MorganFig. XX Global Composite PMI47484950515253545556 Jan 12 May 12 Sep 12 Jan 13 May 13 Sep 13 Jan 14 May 14 Sep 14 Jan 15 May 15 Sep 15 Jan 16 May 16 Sep 16 Jan 17 May 17 Sep 17 Jan 18 May 18 Global Composite PMIS ource: JP Morgan10 Middle East Property & Construction Handbook 2018 /19 COMMODITIESC ommodity prices strengthened in 2017 with improving trade levels, increased investments and positive financial conditions. The uptick in prices is expected to continue in the near-medium term, albeit at a slower rate than that recorded in 2017.

8 Prices will remain susceptible to changes in global demand, policy, distribution channels, technological advances and geopolitical : World Bank economic Prospects, Jun 2018 Oil Price-40%-30%-20%-60%-50%-10%00%10%20%30 %40%201520162017e2018f2019f2020f% change y-o-yFig. XX Growth in commodity pricesNon-energy commodity price indexSource: World Bank economic Prospects, Jun 2018 Oil Price-40%-30%-20%-60%-50%-10%00%10%20%30 %40%201520162017e2018f2019f2020f% change y-o-yFig. XX Growth in commodity pricesNon-energy commodity price index02040608010012014016018020020152014 2016201720182019202020212022 Source: IMF, World economic Outlook, Apr 2018 Index, 2005 = 100 Commodity Price Index includes both Fuel and Non-Fuel Price IndicesIndustrial Inputs (includes agricultural raw materials and metals)Commodity fuel (includes crude oil, natural gas, and coal)Metals (includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium)02040608010012014016018020020152 0142016201720182019202020212022 Source.

9 IMF, World economic Outlook, Apr 2018 Index, 2005 = 100 Commodity Price Index includes both Fuel and Non-Fuel Price IndicesIndustrial Inputs (includes agricultural raw materials and metals)Commodity fuel (includes crude oil, natural gas, and coal)Metals (includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium)Commodity indices Index, 2005=100 Growth in commodity pricesSource: World Bank economic Prospects, June 2018 Source: IMF: World economic Outlook. April 2018 AECOM11 Changes in oil demand growthAnticipated changes in crude oil supplyOil prices The continued co-operation of OPEC countries and the non-OPEC oil producers in 2017 led to a significant improvement in oil prices. OPEC leadership and non-OPEC members, including Russia, have signed a roadmap for cooperation that extends the existing framework post 2018 , without necessarily limiting the production levels of the participating countries.

10 Increased production of shale oil in the US is expected to be partially off-set by reductions in oil extraction in other regions around the world, including Canada and the North Sea. Additionally, increased demand for oil in developing countries is expected to counter reduced demand from OECD countries (mainly advanced economies). This balancing act of supply and demand across the global markets supports stabilization of oil prices in the medium term. Source: OPEC, World Oil Outlook CountriesOECDmb/dFigure XX. Changes in oil demand growthSource: OPEC, World Oil Outlook CountriesOECDmb/dFigure XX. Changes in oil demand growth2014201520162017e2018f2019f2020fFi gure XX. Changes in oil demand growthSource: OPEC, World Oil Outlook 20400%5%-5%10%-10%15%% change y-o-yMiddle EastEuropeAfricaLatin AmericaUS & CanadaAsia-PacificRussia & Caspian2014201520162017e2018f2019f2020fF igure XX. Changes in oil demand growthSource: OPEC, World Oil Outlook 20400%5%-5%10%-10%15%% change y-o-yMiddle EastEuropeAfricaLatin AmericaUS & CanadaAsia-PacificRussia & CaspianSource: OPEC, World Oil Outlook 2040 Source: OPEC, World Oil Outlook 204012 Middle East Property & Construction Handbook 2018 /19 MetalsMetal prices improved in 2017 on the back of increased productivity and trade across many countries.


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