Middle East & Africa Infrastructure Construction Market Outlook to 2028

Middle East & Africa Infrastructure Construction Market Overview

• The Middle East & Africa (MEA) infrastructure construction market has experienced significant growth, reaching a valuation of USD 47 billion. This expansion is primarily driven by rapid urbanization, government-led infrastructure initiatives, and substantial foreign direct investments aimed at enhancing regional connectivity and economic development.

• Dominant countries in this market include Saudi Arabia, the United Arab Emirates (UAE), and South Africa. Saudi Arabia's dominance is attributed to its ambitious Vision 2030 plan, which focuses on diversifying the economy through large-scale infrastructure projects. The UAE's strategic location and investment in world-class infrastructure have solidified its position as a regional hub. South Africa's well-developed infrastructure and ongoing projects aimed at modernization contribute to its significant market share.
• The construction industry in the MEA region is increasingly adopting digital technologies. Building Information Modeling (BIM) is being utilized in projects like Egypt's New Administrative Capital, enhancing project efficiency and reducing costs. The integration of digital tools is transforming traditional construction methodologies

Middle East & Africa Infrastructure Construction Market Segmentation

By Type of Infrastructure: The MEA infrastructure construction market is segmented into residential, commercial, industrial, transportation, and utilities sectors. The transportation segment, encompassing roads, railways, airports, and ports, holds a dominant market share. This is due to extensive government investments aimed at improving regional connectivity and supporting economic growth. For instance, Saudi Arabia's investment in transport and mobility schemes, such as the Riyadh Metro, underscores the emphasis on enhancing transportation infrastructure.

By Construction Type: The market is further segmented into new construction, renovation, and maintenance. New construction projects dominate the market, driven by the need to accommodate growing urban populations and the development of smart cities. Countries like the UAE and Saudi Arabia are investing heavily in new infrastructure to support their economic diversification plans and to position themselves as global hubs for business and tourism.

Middle East & Africa Infrastructure Construction Market Competitive Landscape

The MEA infrastructure construction market is characterized by the presence of both regional and international players. The market is dominated by these key players due to their extensive experience, financial capabilities, and ability to execute large-scale projects. Their strategic partnerships and adoption of advanced construction technologies further strengthen their market positions. Major companies include:

Middle East & Africa Infrastructure Construction Industry Analysis

Growth Drivers

• Urbanization and Population Growth: The Middle East and Africa (MEA) region is experiencing significant urbanization, with urban populations increasing by approximately 50 million people between 2020 and 2025. This surge necessitates extensive infrastructure development to accommodate the growing urban populace. For instance, Nigeria's urban population is projected to reach 120 million by 2025, up from 100 million in 2020, highlighting the demand for enhanced urban infrastructure.
• Government Infrastructure Initiatives: Governments across the MEA region are launching substantial infrastructure projects to stimulate economic growth. Saudi Arabia's Vision 2030 includes investments exceeding $500 billion in infrastructure, encompassing transportation, energy, and housing sectors. Similarly, Egypt's national projects, such as the New Administrative Capital, involve investments of over $45 billion, aiming to modernize urban infrastructure and boost economic development.
• Rise in Foreign Direct Investments: The MEA region has witnessed a notable increase in FDIs, particularly in infrastructure sectors. In 2023, the United Arab Emirates attracted $20 billion in FDIs, with a significant portion directed towards infrastructure development, including renewable energy and transportation projects. This influx of foreign capital is instrumental in advancing large-scale infrastructure initiatives across the region.

Market Challenges

• Political Instability in Key Regions: Political instability in certain MEA countries poses challenges to infrastructure development. For example, ongoing conflicts in Libya and Yemen have disrupted infrastructure projects, leading to delays and increased costs. These conflicts have resulted in the displacement of over 15 million people, further complicating infrastructure planning and execution.
• High Costs of Raw Materials: The MEA construction sector faces challenges due to the high costs of raw materials. For instance, the price of steel, a critical construction material, has seen significant fluctuations, impacting project budgets and timelines. In 2023, the average price of steel in the region was approximately $700 per ton, up from $500 per ton in 2020, affecting the overall cost of infrastructure projects.

Middle East & Africa Infrastructure Construction Market Future Outlook

Over the next five years, the MEA infrastructure construction market is expected to experience steady growth. This expansion will be driven by continuous government support, advancements in construction technologies, and increasing foreign investments aimed at developing sustainable and smart infrastructure solutions. The focus on renewable energy projects and the development of smart cities are anticipated to create new opportunities for market players.

Opportunities

• Public-Private Partnerships (PPP): Public-Private Partnerships are emerging as a viable model for infrastructure development in the MEA region. In Kenya, the Nairobi Expressway project, valued at $668 million, was developed under a PPP model, enhancing urban mobility and setting a precedent for future collaborations.
• Increased Adoption of Smart Infrastructure: The MEA region is witnessing a rise in smart infrastructure projects. For instance, Dubai has invested over $1 billion in smart city initiatives, integrating IoT and AI technologies to improve urban services and infrastructure management. These advancements offer opportunities for innovation and efficiency in infrastructure development.