Bahrain’s construction output contracted by an estimated 0.2% in real terms in 2020 as the industry faced disruptions due to the Covid-19 pandemic and movement restrictions to prevent its spread.
Added to this was the oil price drop, which further compounded this problem as Bahrain is highly dependent on oil revenue.
However, driven by investments in infrastructure, oil and gas and in renewables, the industry is expected to recover in 2021 with an expected real growth rate of 2.1%, according to GlobalData, a leading data and analytics company.
The kingdom’s construction industry is expected to grow at an average rate of 4.3% between 2022 and 2025, stated GlobalData in its report, 'Construction in Bahrain – Key trends and opportunities to 2025.'
This will be supported by investments on the development of the country’s overall infrastructure in line with its economic vision 2030, it added.
Dhananjay Sharma, the analyst at GlobalData, said: "Despite economic diversification efforts, hydrocarbons still account for more than 70% of fiscal revenue and, as a result, the public finances are vulnerable to oil price volatility."
"The IMF’s forecast of a rise in oil prices by 21% in 2021 offers respite to Bahrain’s government as it would facilitate further investments in the industries, energy and utilities and infrastructure sector, which would help in the government’s diversification efforts," noted Sharma.
Projects in Bahrain, as tracked by GlobalData, have a combined value of $80.2 billion.
The pipeline - which includes all projects from pre-planning to execution with a value above $25 million - is skewed towards late-stage projects, with those in the execution stage accounting for 63.1% of the pipeline’s value as of January, he explained.
According to Sharma, the residential and mixed-development projects account for the largest proportion of the project pipeline, with a share of 39% of the total project pipeline.
"This reflects the enormous potential in the residential sector, which has so far been mostly driven by government investments. The government’s efforts at attracting private players as well as foreign investments will boost growth in this sector over the forecast period," he added.-TradeArabia News Service