Bahrain's construction sector is poised for steady growth in the coming years mainly due to the government's continued focus on affordable housing which will lead to several new residential projects across the kingdom, according to BMI research.

Money channelled to the Bahraini government will remain a crucial support to infrastructure project activity over 2018, although a number of major residential, commercial and industrial projects will also support growth, stated BMI research, a unit of Fitch company, in its Bahrain Infrastructure Report - 2018.

Bahrain's housing shortage means the government continues to focus on residential construction projects. However, political risk and weak economic growth will remain the largest detriments to growth beyond 2018, it cautioned.

Maintaining its growth forecasts for the Bahrain construction sector for 2018 and beyond, BMI said support from regional allies and firmer oil prices will see growth in real terms of 6.7 per cent y-o-y.

Without this support however, there is little to drive activity in the construction sector with investors remaining cautious and the economy's weak performance leaving the government little room to ramp up spending, it added.

Political risk will remain a key drag on investment from the private sector, although the industry has settled more into this environment and largescale residential projects are moving forward, stated the research firm citing the recent mega Bahrain Petroleum Company (Bapco) project contract.

Bapco had awarded a $4.2 billion engineering, procurement, construction and commissioning contract to a consortium led by TechnipFMC for its modernisation programme.

The consortium also comprises South Korean firm Samsung Engineering and Spain-based Tecnicas Reunidas. The scheme aims to expand the production capacity of the existing Sitra oil refinery to 360,000 barrels per day from the current 267,000.

The BMI report pointed out that Bahrain remained a regional underperformer on the Infrastructure Risk/Reward Index for the Middle East and North Africa (Mena) region. The country ranks sixth out of 14 states, it said.

In terms of industry rewards, Bahrain also has the smallest project pipeline in the GCC, meaning there are limited major opportunities, stated the report.

However, the country fares better for industry risks due to the maturity of the financial services sector and openness to foreign investment, it added.-TradeArabia News Service