BMI View : The post-sanctions investment uptick we have seen in 2016 will gather pace in 2017, as an improving macro-economic outlook lays the foundation for broad-based, sustained c onstruction sector growth. The i ndustrial construction, oil and gas pipeline, and power sectors will emerge as bright spots, with the robust structural demand serving to entice international investors.
Latest Updates And Structural Trends
We expect robust construction sector growth as the sector expands in tandem with a growing economy, with heightened levels of international investment, in the wake of sanctions easing, driving 7.5% growth in 2017.
Iran's energy and utilities space will outperform the country's wider construction industry in 2017 on the back of projects like the Bushehr nuclear power plant, a USD10bn undertaking which broke ground in September 2016. Construction duties will be handled by Russia-based Rosatom and is expected to be complete in ten years.
An unravelling of the 2015 nuclear accord remains the most significant downside risk to our outlook, as our optimistic view of Iran's construction growth is heavily predicated on the absence of sanctions (which would be reinstated were the agreement to collapse). However, our core view remains that the nuclear account will continue to hold over 2017.
|e/f=BMI estimate/forecast. Source: National Sources, BMI|
|Construction industry value, IRRtn||1,155.3||1,361.6||1,572.7||1,807.0||2,054.6||2,297.0||2,648.4||3,051.0||3,389.7||3,945.6||4,415.1|
|Construction Industry Value, Real Growth, % y-o-y||2.79||7.86||7.50||6.90||5.70||4.30||5.30||5.20||5.10||6.40||5.90|
|Construction Industry Value, % of GDP||9.5||10.1||10.1||10.3||10.4||10.3||10.6||11.2||11.4||12.1||12.4|
The lifting of international sanctions continues to have a positive impact on Iran's overall Risk Reward Index (RRI) score. Iran scores 48.0 out of 100 on the RRI this quarter, an improvement over its pre-sanctions score, yet still trailing the regional average of 53.6.
Iran registers its worst score in the Industry Risks pillar of the RRI with a score of 35.0, reflecting the high barriers to entry, opaque tendering process, and lack of competition in its infrastructure market. We expect Iran's competitive landscape to diversify considerably as the lifting of international sanctions allows foreign players to return and highlight this as an area in which Iran is likely to improve in future.
Iran's Country Risk score holds fast at 46.2, a score considerably below the regional average of 55. Despite the lifting of sanctions, structural problems with its political system remain - the country suffers from endemic levels of corruption, a weak institutional framework and political interference in the judiciary is rife.
|Geography||Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Iran Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Iran Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Iranian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Iran to test other views - a key input for successful budgetary and planning in the Iranian infrastructure market.
- Target business opportunities and risks in the Iranian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Iran.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.