GCC project awards surges 86%

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GCC project awards surged 86 per cent during Q2-2023 to reach $49.7 billion as compared to $26.7bn in awards during Q2-2022 underlining the determination of the GCC countries to execute and reach their diversification targets.

According to Kuwait-based Kamco Invest, the strong rise in the total value of project awards in the GCC is also a significant indicator of the health of the economies in the GCC region.

This was the highest quarterly project awards value for over five years.

All GCC project markets witnessed y-oy growth during Q2-2023 except for Bahrain which remains the smallest project market in the region while Saudi Arabia remained the largest projects market in the GCC during Q2-2023.

Saudi Arabia’s project awards recorded 33.7pc growth during the quarter to reach $24.4bn as compared with $18.3bn in Q2-2022.

Comparatively, the UAE project awards jumped 127pc to $12.2bn during the quarter.

Saudi Arabia alone accounted over 49.1pc of the contracts awarded in the GCC region during Q2-2023, while Saudi Arabia, UAE and Qatar combined represented 94.4pc of the overall projects in the GCC.

Saudi Arabia’s growth in contracts during the quarter was mainly fuelled by the continuous uptick of the number of Neom projects awarded during the quarter.

According to MEED Business Review, the Neom project awards in 2023 stood at $13.6bn which surpassed the total value of contracts awarded in the Saudi capital Riyadh and Dubai which reached $11bn and $9.3bn respectively.

The four major elements of the Neom project (the Line, Trojena, Oxagon and Sindalah) have already been launched and are already under construction.

In terms of sector classification, the Gas Sector witnessed the biggest increase in the value of projects awarded during the year recording $10.3bn year-on-year increase in new contract awards to reach a total of $11.9bn during Q2-2023.

According to MEED Projects, total GCC contracts that are in tender or most likely to be awarded this year are expected to surpass $110bn in 2023 led by Saudi Arabia project markets which are poised to witness significant growth each this year.

The GCC projects market is expected to be resilient to global economic headwinds.

The IMF lowered its 2023 Saudi GDP forecast to 2.1pc due to the oil cuts by Opec+ countries and allies.

However, the reduction of economic forecast and the oil production cut is expected to have minimal impact on the kingdom’s project market and capital spending due to the availability of other revenue sources such as sovereign and private assets.

Saudi Arabia remains the largest projects market both in the GCC and in the Mena region.

Saudi Arabia’s project awarded averaged around $42.5bn in the past five years.

In terms of un-awarded and planned projects, Saudi Arabia has the largest planned and unawarded projects in the Mena region estimated to $1.18 trillion of which a total $836.7bn is the construction sector while $117.7bn is in the power sector.