Rising constructions costs, late payments and a shortage of skilled workers were among the top issues raised by Gulf contractors, developers and consultants responding to a newly released development report by international law firm Pinsent Masons.

According to the sixth annual Gulf Cooperation Council (GCC) construction survey, more than half (53 percent) of respondents said the cost of materials and production costs were higher last year than in 2012. Some 43 percent said they remained the same, and 4 percent said they fell.

Last fall, EC Harris ranked Qatar as the region’s most expensive country to build in. The report cited the large number of projects planned before the 2022 World Cup and short timetable as a potential recipe for disaster in terms of supply issues.

Market disappointments

Meanwhile, some 70 percent of those surveyed in Qatar and 73 percent in Abu Dhabi said the market “disappointed” them last year, alluding to the late awarding of tenders for several infrastructure projects.

Other issues of concern were longer-than-desired payment periods and cash flow concerns. The percentage of people who cited this problem, however, fell from 78 percent in 2012 to 62 percent in the latest survey.

About half of respondents also said a lack of skilled workers in the region was hurting the pace of development. In a statement, Sachin Kerur, who heads Pincent Masons’ Gulf offices, said:

“A business is nothing without its people and organisations need to invest in their internal development programmes ensuring they are more closely aligned to their businesses’ specific needs in the region; which will enable them to deliver on their strategy, drive innovation and ultimately achieve growth.

There is also a need for the GCC’s educational institutions to do more to meet the skills requirements of the industry.”

Despite these challenges, a whopping 90 percent of those surveyed expressed optimism going into 2014, while 77 percent reported healthier order books for the next 12 months as opposed to the previous year.

Thoughts?