The Middle East is the most dynamic infrastructure investment market for investors, according to the second ARCADIS Global Infrastructure Investment Index.
The report findings revealed that the Middle East – Qatar, the UAE and KSA – scored in the top third of the index due to the countries’ strong business environment, healthy pipeline of development work and growing economies, Business Intelligence reported Monday.
“The Middle East has some of the highest investment profiles of anywhere in the globe with average growth in the construction industry reaching double digits. Good infrastructure is critical for the long term economic development of a country, and the region is currently in a strong position in this regard,” said Tim Risbridger, Partner and Head of Infrastructure – Middle East at EC Harris.
“National vision strategies are driving a phenomenal peak spend in these key markets over the next four to five years, increasing investment opportunities for the private sector. Currently, almost half of the investment planned across the region’s major cities relate to transportation.”
The Global Infrastructure Investment Index ranks the world’s 41 most dynamic countries with the greatest potential for growth and investment in their economic infrastructure. Economic infrastructure consists of the infrastructure that makes business activity possible such as transportation, communication, distribution and energy assets.
The top twelve most attractive countries for infrastructure investment in 2014 with its difference ranking from 2012 in brackets below:
The study looked at various issues including the ease of doing business in each market, tax rates, GDP per capita, government policy, the quality of the existing infrastructure and the availability of debt finance. Combining all of these factors provided a strong overview of the risk profile for each market and how attractive each one is likely to be to potential investors.
Singapore’s integrated strategic plan linking infrastructure planning with business and social requirements helped it retain top position in ARCADIS’ index as the most attractive global market for infrastructure investment. However, with a government which self-finances most major projects, investment opportunities are limited; other countries with major investment plans such as Qatar and the UAE were tipped as being more promising for investors.
Risbridger continued, “A key differential that we have seen in Asian and Middle East markets is that those countries that have a clear integrated strategy that ties the infrastructure development plans to business and economic objectives tend to be nearer the top of our ranking. This gives long term clarity to investors and is something that European markets, in particular, would do well to emulate if they are to succeed in attracting more private finance into infrastructure.”
The report also underlined the key risk will be inflation in construction resources from manpower and specialist skills to construction commodities. Despite the potential for rising inflation, the Persian Gulf countries’ strong credit ratings and enviable taxation regimes will continue to appeal to investors.
