Arcadis global report reveals incomes from Middle East’s built assets set to increase by 29 per cent by 2022
Arcadis, an Arcadis company and built asset consultancy firm, today launched a landmark global study that illustrates how buildings and infrastructure contribute to Gross Domestic Product (GDP) across the world.
Developed in conjunction with the Centre for Economics and Business Research (Cebr), Arcadis’ Global Built Asset Performance Index reveals the Middle East grow its built assets by 29 per cent in per capita terms over the coming decade. Despite this expansion, per capita income from built assets is still expected to be the lowest across all countries, reaching US$5,000 by 2022.
“Our main goals in developing the report are to better understand a country’s built asset performance, which take into account the value of all public and private property and infrastructure, in relation to GDP. The report findings are tremendously significant in this regard, underlining GCC – the UAE, Qatar and Saudi Arabia – to be one of the fastest growing regions in regards to built assets over the coming decade. If regional economies continue to diversity their activities, a realignment of investment incentives has the potential to raise built assets returns fairly swiftly,” said Terry Tommason, Head of Middle East Property & Social Infrastructure at Arcadis.
On a per-capita basis, the top ten nations on the Global Built Asset Performance Index are:
Country GDP income per capita (US$)
- 1. Singapore 29,500
- 2. Qatar 20,630
- 3. United Arab Emirates 17,470
- 4. United States 17,460
- 5. Hong Kong 16,340
- 6. Japan 15,450
- 7. Canada 15,430
- 8. Australia 14,050
- 9. Germany 12,730
- 10. France 12,720
- 24. Saudi Arabia 3,690
On an absolute basis, however, Qatar and UAE ranked 30th and 23rd, respectively, out of the 30 markets surveyed, due to both markets relatively small geographic size and population. On this basis, China, India and Japan all featured in the world’s top five markets in terms of GDP generated from built assets, with the USA and Germany completing the top five.
The report highlighted the built asset contribution to GDP as greater in Qatar and the UAE compared to Saudi Arabia, in part due to energy subsidies and construction costs being lower in Qatar and the UAE. Whilst Qatar and the UAE outperform its regional economies, Saudi Arabia is forecast to grow its built asset performance by 70 per cent over the coming decade.
Terry Tommason adds, “From our research we can see that countries face many different challenges in order to maximise the performance of their built assets. While some countries are proactively managing their built asset wealth to put them in pole position to reap the economic returns over the coming decade, others are in danger of failing to invest in their aging built asset base leading to a slow decline in their economic power. Sustaining a built asset base that protects the environment, enables people to thrive and creates economic value is possible but a clear long-term vision to deliver this infrastructure is absolutely essential.”
Performance growth – the Asian economies to watch
In terms of future performance, Singapore did not fare as well. While Asia is by far the region that is expected to see the biggest built asset performance expansion by 2022, with eight of the world’s top 11 markets expected to see the most growth are located in Asia, Singapore and Japan were the economies not to be in the world’s top 11. China, Indonesia, India and Malaysia were all in the top five for projected built asset performance by 2022.
The Global Built Asset Performance Index illustrates, for the first time, how Singapore compares to 29 other countries that collectively represent 82 per cent of global GDP and are a mixture of both advanced and emerging economies. The Index reveals that total built asset income within these countries stands at USD 27.2 trillion, amounting to 40 per cent of total GDP. This figure is expected to rise to USD 28.2 trillion in 2014.
UK and Europe lag behind
The Eurozone countries have some of the highest built asset wealth per capita, but returns are relatively low due in part to a higher proportion of income from services and other intangible sources also due to recent economic stagnation and overcapacity problems. When compared to some of its peers, the UK has lower levels of built asset wealth per capita, but does manage to extract a better than average economic return from its built assets relative to the value of the built asset stock.
Performance growth – the economies to watch
The fastest growth in built asset performance over the next decade is expected in China, Indonesia and Saudi Arabia. China’s built asset income is expected to increase dramatically by 77 per cent up to US$12 trillion by 2022. Similarly, income in Indonesia and Saudi Arabia is set to rise by 65 per cent and 70 per cent respectively.
On the whole built asset performance growth is expected to be greatest in lower income economies, as the process of economic catch up continues over the coming decade. Advanced economies are expected to see built asset returns increase by, on average, 21 per cent, compared to 66 per cent growth expected in emerging markets.
The full report can be downloaded here.
