MEA construction market remains dynamic despite global price pressures

MEA construction market remains dynamic despite global price pressures

This increased construction momentum is in spite of the convergence of a number of economic factors in the first quarter of this year, which put inflationary pressure on material prices. These factors included rising oil and metal prices, exacerbated by geo-political tensions, alongside growing demand for - and shortages of - some materials.

In 2021, the average OPEC oil price was $70/barrel. In the first quarter of 2022, this jumped to $98/barrel. Emirates NBD Research has forecast an average price of $112/barrel over 2022, pricing in on-going geo-political tensions and the possibility of shortages and physical disruption of supplies.

Higher oil prices have a direct impact on construction material prices, due to the increased cost of production, manufacturing and transportation. Over Q1 2022, to give just one regional example, the supply price of steel rebar increased in the UAE, Egypt and KSA by 27%, 17% and 9% respectively. Meanwhile, regional demand for steel is forecast to increase by 4.9% in 2022, to 50.5 million tonnes. With growth in steel demand anticipated to outstrip growth in production around the world this year, this upward trend in the price of steel looks set to continue.

The supply price of other key construction materials, including copper,