Middle East water markets slowing, says report

The economic downturn is expected to restrain of the growth of the Middle East’s water and wastewater treatment equipment markets, according to a report released today by research firm Frost & Sullivan.

The sector experienced rapid 2008 growth, driven by investments in infrastructure, real estate, petrochemicals, oil, and gas. But with crude oil prices sinking to $50 per barrel from $145 per barrel, investors have been cautious of backing new projects, the report said. The market for water and wastewater treatment earned $1.26 billion in revenue in 2008 and is expected to grow to $1.87 billion in 2013.

"It is estimated that some of the downstream and upstream investments, which were planned considering crude oil price of more than $85 per barrel, are likely to be shelved," said Frost & Sullivan’s Senior Research Analyst Vivek Gautam. "This sudden change in the business landscape has stalled market progression, but with strong economic fundamentals and increased governmental expenditure, the GCC market is expected to be back on the rails by 2010."

Environmental and health hazards surrounding the disposal of untreated effluent, marine pollution, and deteriorating ground water quality are some of the market opportunities. Although, the report suggests they are likely to be poorly addressed in the short term.

The extent to which Gulf Cooperation Council (GCC) countries are to be affected by the economic downtown is expected to based on government dependence on oil revenues, dependence of economic growth on external debt and ability to absorb the shock based on the inherent economic resilience, the report said.

The report indicates some large, private real estate developers are using advanced wastewater treatment technologies, and that wastewater treatment and reuse is likely to have widespread adoption in GCC countries. Desalination has also been a main driver for the water segment.

The market is also highly price sensitive, and profit margins of lower technology products are under pressure, according to Frost & Sullivan. Component suppliers face competition from low-cost products from supplier nations including India and China. The report suggests that the burden falls on tech providers to produce increasingly cost-effective products in tough market conditions.

In March, the Indian Institute of Technology Madras filed for two patents based on nanotechnology, including one for a nanocomposite adsorbent that could treat polluted wastewater from the textile and other industries (see IIT uses nanotech for cheap textile wastewater cleanup).

Earlier this year, Anaheim, Calif.-based cleantech incubator Catalyx said it developed a technology to purify heavily polluted wastewater from the textile and other industries using a low-cost, chemical-free process (see Catalyx develops two-way osmosis to purify wastewater).