Maghreb construction sector brightens

5 July 2024

 

The Maghreb remains an active market for construction companies, with $22.1bn of construction and transport projects at the execution stage in the region, excluding major rail schemes, according to regional projects tracker MEED Projects.

Algeria and Morocco are the two most active markets, with $9.6bn and $8.9bn of projects under execution, respectively. The Tunisia and Libya construction markets are much smaller, with $2.3bn and $1.7bn under execution.

At the same time, the value of new project awards has been subdued of late, with only about $2.9bn-worth of major construction and transport contracts awarded over the past two years across the four countries outside the rail sector.

During that period, the Maghreb region has only had two significant contract awards with a value exceeding $400m.

The largest was an $800m contract to build the Tunis governorate’s La Perle du Lac 2 smart city. The project is being undertaken by a joint venture of Societe Bouzguenda Freres and Bonna Tunisie, and is being developed by Tunisian investment firm Al-Buhaira Invest.

The other scheme was the $440m expansion of the Ibn Batouta stadium in Morocco, for which Moroccan contractor Entreprise Moussadak Bouchta secured the contract.

Moroccan optimism

With few significant projects awarded over the past two years, construction companies are eagerly looking to the horizon for future opportunities. Morocco’s hosting of the 2030 World Cup should certainly help its prospects in the mid-term.

In March 2023, King Mohammed VI announced Morocco’s plans to join Spain and Portugal’s bid to host the 2030 tournament, and in September 2023, the bid went through uncontested.

To facilitate hosting the event, Morocco plans to build a 93,000-seat stadium in Casablanca and upgrade at least five existing stadiums.

In March, Morocco appointed the US-based architectural firm Populous and French Oualalou + Choi to design the Casablanca stadium. The state-owned fund Caisse de Depot et de Gestion has signed a deal worth around $500m to finance the stadium’s construction.

Construction work is expected to begin in 2025, and the stadium is anticipated to be ready by 2028.

The five stadiums to be upgraded are the Prince Moulay Abdallah stadium in Rabat, the Ibn Battuta stadium in Tangier, and stadiums in Fez, Agadir and Marrakesh. A stadium in Tetouan may also be upgraded.

In May, Morocco kicked off work on its Mohammed VI International University Hospital in Rabat. Bymaro, the Moroccan subsidiary of French construction firm Bouygues Construction, announced that it had been awarded the €450m ($487m) main contract to build the hospital.

The scope of the contract covers the construction of four six-storey buildings and a 25-storey tower over an area of about 275,000 square metres.

Algerian spending

In December last year, Algeria revealed its Finance Bill 2024, which outlined increasing capital expenditure by 19% to AD2.9tn ($20.8bn).

Of the total, AD848bn ($6.1bn) was allocated to the health sector and AD313.5bn ($2.3bn) was budgeted to construct around 460,000 housing units.

The construction sector’s future pipeline comprises significant projects, including Dunia Park – a theme park planned by the UAE’s Emaar with a multibillion-dollar budget – the $650m Economic Capital City scheme and the $250m Blida Hospital.

Algeria approved the construction of a new university hospital centre in Tizi-Ouzou in June. President Abdelmadjid Tebboune approved the project during a cabinet meeting the previous week.

The project falls under the housing ministry, through the representation of the Public Equipment Directorate of Tizi-Ouzou Province, which has awarded the local contractor Cosider Group the main contract to build the hospital.

Further opportunities

There are also some upcoming opportunities in Libya and Tunisia.

For Libya, there were indications in 2023 that the country could soon begin to put its decade-long conflict behind it, but progress on this and a project market revival has been unsteady.

Looking forward, the big upcoming piece of work is the $2.4bn Lot 4 of the Emsaed Rasejdeer Motorway programme, which is under bid evaluation. The lot’s three packages are set to be awarded in August. The scheme’s $1.2bn Lot 2 and $2.1bn Lot 3 are also under study.

Among Tunisia’s upcoming schemes are plans to award a $150m contract to construct hospitals in the Ghardimaou, Makhtar, Jelma and Haffouz areas. The prequalification for this project was completed in October last year, and the main contract tender is now awaiting issuance.

The country is also prequalifying contractors for the development of the $85m King Salman Ben Abdelaziz University Hospital in Kairouan after Saudi Arabia agreed to provide funding for the project in February. Construction work on the scheme is slated to begin in the second half of 2024.

On the slightly more distant horizon, two highway expansion schemes worth a combined $550m are currently being studied in Tunisia and are expected to be awarded in 2026.

Across the region, recent project activity in the construction and transport sector outside of rail has been disappointing in the past two years, but schemes financed by both the public and private sectors are now progressing through pre-execution in a way that promises better things to come.

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Yasir Iqbal
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