The Middle-East Paints and Coatings Market was estimated to be valued at over USD 3.2 billion in 2020 and the market is projected to register a CAGR of over 3.5% during the forecast period (2021-2026). COVID-19 has created economic instability and lockdowns, which created a fall in the varous end-user industries such as construction and automotive industry. Following the pandemic, the automotive industry in GCC region has decreased by nearly 24% in 2020 compared to that of 2019.
Moreover, with construction companies entering the post-COVID-19 environment, they have a challenging job ahead ensuring their workers abide by social distancing guidelines and remain productive. Also, the construction companies around the world are deciding whether to close or stay open with strategies to keep workers healthy. Consequently, slowing the construction projects, thus leading to the layoff of employees. However, the markets are slowly opening, which is likely to be an encouraging sign for the market growth.

- Over the short term, increase in the construction of hotels and restaurants, re-painting of old hotels, and maintenance of architectural and decorative infrastructure (to attract the tourists), are expected to boost the market studied. The tourism in the Middle East is increasing primarily due to people traveling for leisure, business trips, etc. Around 85% of the people are traveling to the Middle East for leisure and around 15% visit due to business trips. This, in turn, is driving the construction activities in the commercial and infrastructure sector in the Middle Eastern region.

- Volatility of raw material prices and other restraints such as recession of the construction industry in Iran and decline of automotive sales is likely to hinder the market growth.
- The rising demand for eco-friendly products is expected to offer various opportunities for the growth of the market studied over the forecast period
- These very concerns have encouraged the emergence of bio-based paints and coatings, which are eco-friendly in nature, are projected to act as an opportunity for the market in the future.

Key Market Trends

Increasing Demand from the Architectural Industry

- Paints and coatings are extensively used in the architectural sector for both exterior and interior applications. Paints and coatings are applied on the exterior of the house, not only to give them a new look, but also to protect it from blistering summers, freezing winters, soaking rain, and the daily exposure of UV radiation (without fading, peeling away, and cracking the exteriors).

- Paints and coatings are also used in the interiors of houses to add color or for decorative purposes, along with a wide range of other functions. The functions vary depending upon the type of environment and room that they are used on. For example, paints with glossier sheens have a tighter molecular structure than flat paints, making it more difficult for moisture to penetrate, and hence are used in bathroom walls. Most ceilings are painted flat white so that they could reflect most of the ambient light in the room to give the resident a spacious and relaxed.

- There are an estimated USD 1.45 trillion worth of planned construction projects planned in all the GCC countries, supported by strong fundamentals, like increased population growth, young demographics, and a growing requirement for infrastructure across multiple sectors. Saudi Arabia and UAE are by far the largest constructing spenders in the region.

- The construction industry in the Middle East has been steadily coming in track, since 2014. Construction demand is expected to be strongest in Saudi Arabia, followed by Iran, Iraq, and United Arab Emirates. Qatar and Kuwait are expected to register the highest growth rates for the next three years through 2022.
- In 2019, a total of USD 102.3 billion worth of projects were processed across all GCC countries, compared to USD 101.8 billion in 2018.

- These developments in construction sector is partly due to the robust economic growth and its positive implications on corporate profits, household income, and the state of public finances.
- All the aforementioned factors are expected to drive the Middle-East paints and coatings market in the architectural industry during the forecast period.

Saudi Arabia to Dominate the Market

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- Saudi Arabia is by far the largest national market in the Middle-East, accounting for nearly half of the total demand for paints and coatings in the region. According to the International Monetary Fund (IMF), the kingdom has announced a bold reform program under its Vision 2030, due to which growth is expected to be robust over the medium-term as structural reforms are implemented.
- Saudi Arabia had registered a growth rate of 2.4% in 2018, in terms of GDP, which slowed down to 0.2% in 2019, owing to the lower crude oil prices and unfavorable geopolitical factors. As per the International Monetary Fund, in 2020, the Saudi economy was expected to contract by 5.4%.

- In Saudi Arabia, the construction industry accounts for nearly 6-7% of the total GDP of the country. The announcement of Vision 2030 and the associated National Transformation Plan (NTP) increased investments in various sectors, such as healthcare and education, to support the country economic growth.
- According to the Middle East Economic Digest (MEED), the total value of the Saudi Arabian capital projects was estimated to be around USD 1.4 trillion.

- The country has generated large-scale projects worth USD 800 billion to boost its infrastructure in the coming years. The government has expansive plans for the development of social infrastructure, transportation, and energy and utility construction in the country. The country primary growth in construction has been largely powered by the massive investments done by the government and increased inflow of FDI.
- The urban construction sector is the largest contributor to the construction sector expansion, with 3,727 active projects valued at USD 386.4 billion.

- Rapid urbanization increase in population growth and tourism are expected to drive growth in the building sector especially in the residential and leisure markets. The government is stepping up investment in KSA transport infrastructure, fast-tracking key projects and creating new opportunities for service sector.

- The country is a large importer of vehicles and auto parts, it is trying to attract original equipment manufacturers (OEMs) to open their production plants in the country to develop the domestic auto industry.
- Following the pandemic, the automotive industry in Saudi Arabia was nearly 252 thousand units compared to 387 thousand units in 2019. The markets are slowly opening, this will be an encouraging sign.

- According to industrial statistics, the total revenue of the furniture and appliances market in 2019 is estimated to be nearly USD 830 million. The furniture industry is growing, with the support of the real estate development projects, followed by the rising demand for residential properties in the country.
- All such development is expected to drive the paints and coatings market in the country during the forecast period.

Competitive Landscape

Middle Eastern paints & coatings market is highly consolidated market, with the top six players contributing to about 70% of the market share. Key players in the market include Akzo Nobel N.V., Jazeera Paints, Jotun, PPG Industries, Inc., and National Paints Factories Co. Ltd, among others.

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