The Middle East video surveillance and video surveillance equipment market has reached US$320 million in annual revenue during 2012, according to research from IHS, a leading global source of critical information and insight. The Middle East has been one of the fastest growing regions in the world for video surveillance equipment in recent years, propelled by high levels of construction spending, as well as government spending on infrastructure as cities have grown.
The Middle East video surveillance and video surveillance equipment market has reached US$320 million in annual revenue during 2012, according to research from IHS, a leading global source of critical information and insight. The Middle East has been one of the fastest growing regions in the world for video surveillance equipment in recent years, propelled by high levels of construction spending, as well as government spending on infrastructure as cities have grown.
The global financial crisis around 2008 had an impact on the region's growth, as it did across the whole world, but continued production and strong demand for oil helped maintain government budgets in the Middle East. As a result, the impact on video surveillance equipment revenue wasn't as great as seen elsewhere in the world.
The fact that the Middle East is an adopters of network video surveillance technology also helped to keep the market growing. Having tipped in 2011 (higher revenue for network surveillance than for analog surveillance equipment) almost 60% of equipment revenue in 2012 came from network video surveillance products and the proportion is still rising. Each new installation has greater technological capability, but also higher cost, than the “old” analog technology.
Dramatic Slide in 2012
Having held true to IHS forecasts for many years, growth rates for revenue from video surveillance equipment in the Middle East fell dramatically in 2012 due to three unforeseen circumstances – the civil unrest in the region, the fall in oil price and production and the fall in the US dollar which means 2012 is skewed downwards in comparison with 2011.
Looking back at the forecast made at the beginning of 2011, the expected year-on-year growth rate for 2012 was expected to be at 17.4%, but the combined effect of a much weaker dollar value, falling oil prices, and civil unrest actually caused growth rates to fall to only 5.3% instead.
Social turmoil and changes in oil price make 2013 uncertain
The region continues to search for stability and recovery from the Arab Spring revolution, with political turbulence and social showing little sign of abating. Some countries such as Yemen have struggled through their respective political transitions, weighing down their recoveries and growth prospects for 2013. Other countries such as Jordan, managed to escape full revolt with self-prescribed political reforms, also face ongoing political tensions and turbulence that have stunted the rebound for crucial activities such as tourism and investment.
Meanwhile, the ongoing civil war in Syria and Iran's standoff with the West over its nuclear program look set to cast a shadow over the region for much of 2013, with dire consequences for their respective economies.
One long-term trend that can be expected is the security will be at the forefront of any new government's mind throughout the region. Whilst spending slows during times of turbulence as focus shifts onto higher priorities, once any stability reappears, and then spending on surveillance projects such as Safe City initiatives is likely to increase.
However, governments will only be in a position to spend budget on security if the overall economy is not too badly affected by changes in oil pricing ad production. One of the market indicators that can be used to loosely track security spending is based on a country's GDP and its governmental budget. Real GDP is forecast to slow in 2013 in accordance with an assumption that Brent oil prices will fall to an average of $103 a barrel over the year. GDP growth should bounce back somewhat in 2014 and 2015, although much will depend on regional geopolitical developments and outlook for the global economy.
Of the largest countries by equipment sales, Qatar is likely to be the most affected since oil production accounts for over 50% of its GDP and around 70% of governmental revenues. Saudi Arabia will also be impacted, although its typically more cautious approach to production estimates means it will not be as badly affected.
Non-oil reliant economies to grow
Elsewhere, it's clear that non-oil-reliant economies will prosper more in the region – and fortunately for the security market the biggest countries for video surveillance sales tend to fit this category.
Turkey remains the largest country for video surveillance equipment revenue and will likely remain so for the foreseeable future. Turkey has seven cities with a population greater than 1 million people and ongoing government spending on city surveillance and infrastructure is forecast to stay strong.
Meanwhile, GDP in the U.A.E is only 25% dependent on oil production, with its economy more closely linked with the Western Banking world. The ongoing gradual recovery in the Western economy has helped construction spending to rise once again, stimulating the security market.
Security Remains Strong
So Despite the clear short-term impact from changes in oil markets and from civil unrest, the Middle East market is already showing signs of recovery in terms of security spending levels and HIS forecasted growth in the video surveillance market to return to an upwards curve again in 2013 – even if it will take until 2015 to get back to the levels of annual increase seen before 2012.