KUWAIT CITY – The GCC project sector ranks among the world’s most dynamic and rapidly expanding, boasting trillions of dollars in ongoing or planned projects.
In Q3-2023, GCC project awards surged by 86 percent to $41.8 billion, up from $22.2 billion in Q3-2022, underscoring the sustained growth trajectory of the GCC’s project market. This marked the third-highest quarterly value of projects awarded in the past five years.
This significant growth in the total value of awarded projects in the GCC underscores the region’s commitment to achieving their economic diversification objectives. The consistent diversification efforts in the GCC have driven a steady upward trend in quarterly project awards since 2018.
A recent report by Kamco Invest reveals that all GCC countries, except for Qatar, experienced year-over-year growth in the total value of contracts awarded during Q3-2023.
Kuwait led in year-over-year percentage growth for the quarter, with contract values soaring over 13-fold to $2.3 billion, up from $162 million in the same quarter of 2022.
Conversely, while Bahrain saw a 94.5 percent increase in its contract values for Q3-2023, reaching $247 million, it remained the smallest project market in the region. Saudi Arabia retained its lead as the GCC’s largest project market in Q3-2023.
Contract values in the Kingdom more than doubled in Q3-2023, hitting $21.2 billion, up from $9.3 billion. The UAE also saw a significant 101.7 percent increase in awarded contracts, reaching $15.5 billion for the quarter.
GCC Project Sector At A Glance GCC Project Awards in Q3-2023: $41.8 billion, an 86% increase from $22.2 billion in Q3-2022. Third-Highest Quarterly Value: The Q3-2023 marks the third-highest value of projects awarded in the past five years. Kuwait's Growth: Contract values rose over 13-fold to $2.3 billion in Q3-2023, up from $162 million in Q3-2022. Bahrain's Increase: 94.5% jump in Q3-2023, reaching $247 million. Saudi Arabia's Contract Values: More than doubled to $21.2 billion in Q3-2023, up from $9.3 billion. UAE's Contract Growth: 101.7% increase to $15.5 billion in Q3-2023. GCC Gas Sector Growth: $11.8 billion in Q3-2023, up from $811 million in Q3-2022. Water Sector Growth: 178.4% year-over-year increase, reaching $7.6 billion in Q3-2023. MEED Projects Forecast for 2023: GCC contracts expected to surpass $110 billion. UAE's Future Projects: Expected to reach $28.5 billion in the next 18 months. Saudi Arabia and Qatar's Future Contracts: Estimated at $23.5 billion and $13.2 billion, respectively, for the next 18 months. Decade Overview: Contracts in the oil, gas, and petrochemical sectors surpassed $280 billion over the past ten years.
Saudi Arabia alone represented over 50 percent of the contracts awarded in the GCC during Q3-2023. Combined, Saudi Arabia, the UAE, and Qatar accounted for 93.0 percent of all projects awarded in the GCC during this period.
Saudi Arabia’s surge in contract awards for the quarter was primarily fueled by an uptick in the gas and water sectors. Additionally, the consistent unveiling of new projects under the country’s Vision 2030 initiative further bolstered the year-over-year growth in contract awards.
In Oman, the total value of contracts awarded rose by 8.4 percent year-over-year, reaching $376 million in Q3-2023, up from $347 million in Q3-2022. This growth was predominantly driven by the country’s water and gas sectors, which accounted for $200 million and $80 million, respectively.
The UAE saw its project awards double year-over-year in Q3-2023, reaching $15.5 billion, compared to $7.7 billion in the same period of 2022. The UAE retained its position as the second-largest project market in the GCC for Q3-2023.
Furthermore, the UAE’s total contracts for the quarter also saw a slight quarter-over-quarter increase of 1.2 percent. Annually, the UAE awarded contracts worth $26.1 billion in 2021 and $24.6 billion in 2022. This was notably lower than the average annual contract value of $40.4 billion from 2013 to 2020, a dip attributed to disruptions caused by COVID-19.
However, the total value of projects awarded in the first nine months of 2023 has already exceeded $40 billion, signaling a robust recovery in the UAE’s project market.
Regionally, the GCC Gas Sector experienced the most significant growth in absolute value of projects awarded for the year, registering $11.8 billion in Q3-2023, a stark increase from $811 million in Q3-2022.
The water sector followed closely, with a 178.4 percent year-over-year growth, amounting to $7.6 billion in total contract value for the quarter.
Market outlook
MEED Projects forecasts that the total GCC contracts, either in tender or likely to be awarded this year, will surpass $110 billion in 2023. This growth is spearheaded by the project markets in Saudi Arabia, Qatar, and the UAE, all of which have already seen substantial growth in awarded projects in the first nine months of the year.
Additionally, both Kuwait and Oman have seen marked increases in the value of contract awards throughout 2023. The future contract awards in the GCC are anticipated to be dominated by the oil, gas, and petrochemical sectors, which are set for substantial growth in the immediate and foreseeable future.
In terms of imminent expenditures, the UAE stands out with the most substantial short-term value of planned projects in the oil, gas, and petrochemical sectors among the GCC nations. The UAE’s known future projects in these sectors for the upcoming 18 months are projected to hit $28.5 billion.
In comparison, the anticipated values of known oil, gas, and petrochemical contracts for Saudi Arabia and Qatar are pegged at $23.5 billion and $13.2 billion, respectively, over the same timeframe. To put this in perspective, the cumulative value of contracts awarded in the oil, gas, and petrochemical sectors over the past ten years surpassed $280 billion.
The outlook for future GCC project awards remains optimistic in both the short and long term. Recently, the Jeddah Economic Company (JEC) extended invitations to contractors to bid on the completion of the Jeddah Tower, set to be the world’s tallest building.
The project’s anticipated completion before 2030 will serve as a significant benchmark for the Saudi projects market, reinforcing the confidence of both the Saudi government and construction entities.
Conversely, as the recovery from the pandemic gains momentum, the UAE is preparing to roll out new and ambitiously groundbreaking projects. One such venture is the Tower at Creek Harbor project, slated to commence in Q2-2024. The construction of the Tower Creek Harbor project experienced delays in 2019 after the completion of the tower’s foundation work.
Furthermore, Dubai’s Roads & Transport Authority is gearing up to release tender documents for the previously postponed Dubai Metro Blue Line. This line is intended to link Dubai’s Metro network to the Dubai Creek Harbor development.