Focus: GCC Projects Market

GCC sees 12pc surge in contracts value

Value of GCC contract awards (US$ million) by country Q2 2021 Vs Q2-2022

The total value of GCC contracts awarded in Q2 surged by 11.7 per cent to hit $22.8 billion over $20.4 billion in the same period last year mainly driven by regional heavyweight Saudi Arabia – which accounted for 77 per cent of the deals or $16.5 billion – and Oman which reported higher contract awards for the quarter that more than offset a dip in awards in Kuwait, Bahrain, Qatar and UAE, said a report.

GCC project awards improved during Q2 despite global economic challenges that was caused by supply chain problems and higher oil prices primarily due to the ongoing Russia-Ukraine conflict, according to the report by Kuwait-based Kamco Invest.

According to Kamco, the GCC’s largest projects market, Saudi Arabia, recorded the biggest y-o-y (year-on-year) increase in value of contracts awarded during Q2 that surged to hit $16.5 billion from $9.3 billion in the same period last year. The major contracts awarded include those linked to the kingdom’s ambitious $500-billion future city Neom, which boosted the country’s tally for the quarter, it stated.

According to MEED, three out of the 10 biggest contracts awarded in the kingdom during Q2 were from the Neom project. Comparatively, the UAE recorded a 46.4 per cent fall in y-o-y projects awarded in Q2 which fell to $3.1 billion.

Value of GCC contract awards (US$ million) by industry Q2-2022

Value of GCC contract awards (US$ million) by industry Q2-2022

Kamco pointed out that the neighbouring Oman saw the value of new project awards jump almost three times to hit $1.1 billion rising from $390 million last year. One notable project awarded in Oman during Q2-2022 is the $195-million contract to construct plaza, commercial and residential buildings as parts of the $1.6-billion Sustainable City Yiti project.

On the other hand, the value of the total projects awarded in Kuwait fell 67.9 per cent to $521 million down from $1.6-billion last year, while those awarded in Bahrain during Q2-2022 witnessed a decline of 83.9 per cent to reach $228 million compared to $1.4 billion during Q2-2021.

In terms of sector classification, transportation topped the list with biggest increase in terms of absolute value adding $4.8 billion to new contracts thus taking the total to $7.7 billion.

Similarly, the value of new contracts in the GCC oil sector increased almost three-fold to $4.5 billion during Q2-2022 rising from $1.6 billion during Q2-2021. On the other hand, the gas, construction and power sectors witnessed y-o-y decline in awards, stated the report.

According to Kamco, the project awards in the construction sector contracted 36 per cent y-o-y to $4.3 billion during the quarter.


Saudi Arabia

Saudi Arabia has enjoyed the best Q2 contract awards since 2014, mainly reflecting elevated oil prices, although the kingdom has clearly stated that it wants to separate project awards and oil market performance, said the Kamco report.

Total Saudi project awards in Q2-2014 stood at $19.5 billion compared to $16.5 billion during Q2-2022. The value of contracts awarded in the kingdom witnessed a q-o-q increase of 106.7 per cent, to $8.5 billion from $8 billion in Q1-2022.

In terms of sectors, the transportation sector leapt into the lead as the largest sector by value of awarded projects in the kingdom accounting for 36.1 per cent of the total projects awarded during Q2, mainly due to Neom awards of transport and utility infrastructure. Neom has awarded two key contracts to build two 28-km-long tunnels for high-speed transport and freight services.

In another major transportation contract, DP World and the Saudi Ports Authority (Mawani) have agreed to a 30-year deal worth $133 million to build a large-scale logistic park at the Jeddah Islamic Port. The agreement includes the construction of a 415,000-sq-m area, which has an in-land container depot with capacity of 250,000 TEUs.

Other notable projects awarded during the quarter included the $800-million project to convert the Shuaibah 3 plant into an energy-efficient reverse-osmosis desalination plant.

In the construction sector, the $1.3-billion King Salman International Park contract was the largest awarded during the quarter. It includes the construction of museums, art academies as well as a national theatre and cinemas.



According to Kamco, the UAE maintained its position as the second largest projects market in the GCC after Saudi Arabia during Q2 despite witnessing a q-o-q decline of 25.4 per cent to reach $3.1 billion. In terms of y-o-y performance, the decline was steeper at 46.4 per cent.

As a result, the UAE represented 13.8 per cent of the total contracts awarded in the GCC in Q2 this year compared to 25.2 per cent last year.

In terms of sectors, the construction sector once again had the largest share of the pie of new project awards representing 64.3 per cent of total projects in Q2-2022. However, new projects awarded in the sector decreased 22.5 per cent y-o-y to reach $2.0 billion during the quarter down from $2.6 billion in Q2-2021. On the other hand, the transport sector witnessed the largest percentage growth in awards recording $423 million in new contracts during Q2-2022 as compared to $106 million in Q2 of last year. The power sector witnessed the only other y-o-y growth, registering a 12.8 per cent increase in value of new contracts that reached $379 million during the quarter as compared to $336 million in Q2-2021.



The report said the total projects awarded in Kuwait plunged by 67.9 per cent from $1.6 billion in Q2 of 2021 to $521 million in Q2 this year. The transportation sector once again had the lion’s share of contract awards worth $377 million up from $18 million last year.

On the other hand, new projects awarded in the construction sector fell 94 per cent to $78 million in the country during the quarter from last year’s figure of $1.2 billion.

However, Kamco pointed out that despite the decline in the total value of new projects awarded in Kuwait during the quarter, the pipeline of project remained strong in the country.

Kuwait Oil Company (KOC) is currently planning the tender of a $700-million project to improve the efficiency of four gathering centres in east Kuwait, and a $650-million project to expand two effluent water disposal plants.

Other GCC countries

In Qatar, the total contracts awarded fell by 27.3 per cent to hit $1.3 billion compared to $1.8 billion during Q2-2021 similar to the neigbouring Bahrain, which too witnessed a decline during the quarter to reach $228 million down from $1.4 billion in Q2-2021.



According to Kamco, despite varying trends during Q2-2022, the projects pipeline in the GCC region continues to remain strong. Data from Meed Project showed around $2.65 trillion worth of projects are being planned or underway in the GCC as of the end of June-2022 compared to $2.59 trillion at March-end.

Data showed that around $77 billion worth of construction and transport projects are at the tender stage and an additional $352 billion at the design and study stage and these are mainly in the infrastructure schemes funded/initiated by the government including railways, highways, bridges, airports and sewerage systems.

The pipeline also reflects new emerging trends in the projects market highlighting a number of real estate projects, especially in the UAE, as supply remained constrained; and there are projects that are aimed at energy transition.

In addition, rail projects are back in the headlines in the GCC, with data showing that around 12 per cent of projects underway in the transportation sector are related to railways and this share looks set to increase to 32 per cent in terms of future pipeline, the report concluded.