Saudi Arabia acquires 50% of GCC project awards value

The GCC-awarded projects value increased by 86% during the third quarter of 2023, according to a recent note from KAMCO Investment, and the data collected by “Meed”, reached $41.8 billion compared to $22.2 billion in the third quarter of 2022, which confirms the continuation of the upward trend of the project market in the region.

This level is the third highest recorded in terms of the value of projects assigned on a quarterly basis over the past five years.

All GCC countries witnessed year-on-year growth in the third quarter of 2023, with the exception of Qatar, which recorded the only decrease in the value of projects awarded during the last quarter.

Kuwait took the lead in terms of year-on-year growth rate during this quarter after the total value of contracts jumped by more than 13 times to reach $2.3 billion, compared to $162 million in the same period in 2022.

On the other hand, Bahrain remained the smallest project market in the region, despite the fact that the value of projects that were awarded witnessed a huge jump of 94.5% during the third quarter of 2023, with a total value of $247 million.

While Saudi Arabia retained its position as the largest project market in the GCC during the third quarter of 2023, the volume of contracts doubled to 21.2 billion US dollars, compared to $9.3 billion in the same period in 2022. Similarly, the total value of contracts awarded in the UAE jumped by 101.7% to $15.5 billion during the quarter.

Saudi Arabia alone accounted for more than 50% of the value of contracts awarded in the GCC region during the third quarter, while Saudi Arabia, the UAE, and Qatar together accounted for 93.0% of the total value of projects awarded in the GCC.

The growth in the value of contracts awarded in Saudi Arabia during this quarter was mainly due to the huge jump in the gas and water sectors. In addition, the year-on-year growth of the value of projects awarded in the kingdom was supported by the continuous launch of Saudi Vision 2030 projects.

On the other hand, the total value of contracts awarded in Oman increased by 8.4% year-on-year to reach $376 million during the third quarter of 2023 compared to $347 million in the third quarter of 2022, mainly supported by the growing value of water and gas projects in the sultanate, which reached $200 million and $80 million, respectively.

The largest sectors of gas

In terms of sector classification, the GCC gas sector witnessed the largest increase in the value of projects awarded during the year, with a total value of $11.8 billion in the third quarter of 2023 compared to $811 million in the comparative period, followed by the water sector, which recorded a growth of 178.4% year-on-year, bringing the value of contracts awarded within the sector during this quarter to $7.6 billion.

Saudi Arabia has intensified the implementation of its Vision 2030 initiatives and approved a large number of infrastructure projects, including the award of a large number of subcontracts for many mega projects such as the Neom and Diriyah projects. According to the data collected by “Med”, the kingdom has awarded contracts worth more than $13 billion on projects related to the NEOM project over the past twenty months.

The strong economic growth achieved by Saudi Arabia in 2022 has facilitated the kingdom’s path forward in many of its ambitious projects within Vision 2030. The kingdom will have the fastest-growing economy among the group of twenty countries in 2022, with a growth rate of 8.7%.

Growth prospects of the Gulf project market

According to Meed, the value of contracts that have been offered or will most likely be awarded this year in the GCC is expected to exceed $110 billion in 2023 at the forefront of the Saudi, Qatari, and Emirati project markets, which have already witnessed significant growth in project awards during the first nine months of this year.

Kuwait and Oman have also recorded strong growth in the value of contracts awarded so far during 2023.

It is expected that the oil, gas, and petrochemicals sectors will come to the forefront of the sectors that will witness the awarding of future contracts in the GCC countries, which are preparing for significant growth in the near and medium term. In terms of future spending, according to the data collected by “MEED”, the UAE comes in first with the greatest value of short-term planned projects in the oil, gas, and petrochemical sectors at the GCC level.

It is expected that the value of the well-known future oil, gas, and petrochemical projects in the UAE over the next eighteen months will reach 28.5 billion US dollars. Similarly, the value of well-known oil, gas, and petrochemical contracts in Saudi Arabia and Qatar is expected to reach $23.5 billion and $13.2 billion, respectively, during the same period. In this context, the total value of the contracts awarded in the last decade for the oil, gas, and petrochemical sectors amounted to more than $280 billion.

There is a positive sentiment in the short and long term towards the establishment of future projects in the GCC countries. Jeddah Economic Company recently invited contractors to submit tenders for the project of completing the Jeddah Tower (the tallest building in the world).

The completion of the project, which is expected to be completed before 2030, will be a milestone for the Saudi project market as it will boost the confidence of both the Saudi government and construction companies.

UAE to launch new, exciting, and ambitious projects

On the other hand, the UAE is preparing to launch new exciting and ambitious projects as the recovery from the pandemic continues. Among the ambitious projects planned to be implemented in the UAE is the “Creek Harbor” tower project, which is expected to begin during the second quarter of 2024. The construction of the project has been delayed since 2019, when the laying of its foundations was completed.

The Dubai Roads and Transport Authority (RTA) is also planning to issue the documents for the tender for the blue line of the Dubai Metro, whose implementation has already been delayed. The Blue Line will connect the Dubai Metro network with the Dubai Creek Harbour development project.