Social Infrastructure Projects in the Middle East

Michael Connor
The GCC countries need better social infrastructure, but funding remains a challenge.

The link between targeted economic sustainability and the need for investment in education, healthcare, law and order, culture, recreation etc is well recognised in each GCC country, supported by their individual National Vision plans. Social infrastructure is recognised as a priority, together with the built environment required to support it.

However, the current regional focus generally remains one of strategy development and master planning, with essential construction commitments only. There has been a significant reduction in contract awards in the last year or so.

Nonetheless, GCC governments are highlighting housing, education and health (schemes with maximum social impact) as priorities for the remainder of 2017 and 2018. These sectors reflect the challenges across the region, where child obesity and diabetes remain high and school-leaver literacy and numeracy need improvement.

One welcome trend is the recent focus on creating communities. Developers and authorities are favouring mixed-use developments, creating integrated places to live with nearby and civic and recreation facilities. This approach fosters connectivity between people and places, enabling stronger social cohesion.

We’re also seeing changes in the retail sector, with smaller community-based provision (grocery and necessity shopping) malls appearing in response to increased housing developments.

Bringing the necessary projects to market is a financial challenge, with supressed incomes and global liquidity shortages compounded in the region. Many social infrastructure schemes are expected to attract alternative funding to enable delivery. In the meantime, governments are exploring what is needed, when it’s needed and how it can best be delivered, with a preference for off balance sheet transactions.

During 2017 (Q3/Q4) we expect a rise in awards as programme reprioritisation continues and liquidity moves through the system and engages with projects. The stabilising oil price and OPEC compliance with cut backs in Q1 (with a potential to expend further through the year), governments in the GCC should start to see improved balance sheets and more surety around their ability to commit to schemes.

There will continue to be a drive to do more with less, as governments strive to balance expectations of a cradle-to-grave support system with realistic and sustainable budgets. Efficiency gains take time to identify and implement, with instant results rarely possible.

The green shoots of cohesive governmental strategizing are starting to take hold and this in turn is providing the private sector with an opportunity of facilitating government aims and securing the successful delivery of their own national visions.

Faithful+Gould has both the experience and a proven track record on all sides of social infrastructure transactions, particularly in helping governments to connect with the private sector to unlock different ways of securing funding.

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