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Cyril Lincoln, executive vice president and global head of real estate finance, said planned and ongoing social projects in the GCC are worth more than $121 billion, and the private sector is expected to play a greater role in the delivery of future infrastructure projects. Acting and advising at Mashreq Bank, citing data.
According to regional project tracker Meed Projects, more than $50 billion in social infrastructure work is underway, while the remaining $70 billion is in various stages of planning. Of the total, nearly $71 billion was located in Saudi Arabia, followed by Kuwait ($33 billion), Qatar ($5.7 billion), the United Arab Emirates ($4.7 billion), Oman ($3.7 billion) and Bahrain ($3.1 billion).
“Social infrastructure will continue to be at the top of the GCC government’s agenda as they prioritize quality of life, healthcare and education for their growing populations,” Lincoln said.
“But there is a need to diversify the way these projects are delivered. It should not be seen solely as the responsibility of the government,” he said.
He added that due to the large number of planned and ongoing projects in the sector, private developers, contractors and asset managers have a huge opportunity to support the long-term goals set by the regional government.
wide range of opportunities
Data from Meed Projects further highlights that $66.3 billion worth of social housing schemes make up the largest share of active social infrastructure projects in the GCC. More than $24 billion is under construction, with the rest in various stages of planning, design and procurement.
Likewise, healthcare projects worth $17.8 billion are under construction in the GCC, while education projects account for $8.5 billion.
Usually, these projects are funded by the public sector. This means that challenges in recent years, including the Covid-19 pandemic and volatile oil prices, have affected promised infrastructure spending.
new life
With oil prices stabilizing in 2022, it is natural to expect these projects to gain a new lease of life. But when it comes to pro-cyclical spending, governments may need to tread carefully.
“The experience of recent years should serve as a lesson moving forward,” Lincoln said. “Even in fragile times like falling oil prices, it’s important to balance spending.”
Procurement through modalities such as public-private partnership (PPP) agreements enables the state to transfer key risks to private stakeholders while still retaining full ownership of the asset.
“Another aspect to keep in mind is the technical expertise that the private sector can bring to such projects,” he said.
“Especially in areas such as healthcare and education, these players can bring about disruptive innovation,” he added.
oil windfall
Despite the windfall of recent oil and gas price increases, the growth of PPP projects in the social infrastructure sector is steadily increasing.
In Saudi Arabia, Al-Ansar Hospital is the first project approved by the Saudi Arabian healthcare sector under the Vision 2030 privatization plan.
The Saudi Ministry of Health and the National Center for Privatization and PPP (NCP) have qualified companies to bid for contracts to develop two medical city projects – King Faisal Medical City and Prince Mohammed bin Abdul Aziz Medical City.
Meanwhile, in Oman, the Ministry of Finance has issued a request for proposals for upcoming PPP projects in the sultanate, covering areas such as health, education, transport and IT. Oman previously announced 10 successful prequalification bidders for 42 schools, planned to develop into a PPP.-TradeArabia News Service
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