Project awards in GCC rise to 20.3 per cent to accomplish $45bn

Project awards in the GCC defied regional and global challenges, surging 20.3 per cent year-on-year to reach $45 billion in the first quarter of 2024 and the UAE maintained its spot as the second-biggest projects market in the region.

UAE Growth

UAE during the first quarter dipped marginally in the projects awarded, by 1.0 per cent y-o-y during Q1 2024 to reach $11.5 billion as compared to $11.6 billion in Q1-2023, while across the region, the value of total projects surged to $45 billion from $37.4 billion in Q1-2023, Kamco Invest data shows.

The regional upturn also defies oil production cutbacks which have all weighed on economic growth in the region as seen from International Monetary Fund’s latest forecast that slashed GCC economic growth forecast for 2024 to 2.4 per cent from its previous forecast of 3.7 per cent, Kamco said in its study titled ”GCC Projects Market Update: Q1-2024.

Saudi Arabia Growth

Saudi Arabia accounted for more than half of the contracts awarded in the region during the quarter with aggregate awards of $23.5 billion against $19.1 billion in Q1-2023 and continuing its strong non-oil growth rate run. Saudi Arabia has shown a change in strategy and is expected to have a more focused approach. The kingdom gives precedence to projects instead of all round development beginning with the completion of modules at the marina in The Line at Neom project. The value of contracts for Qatar jumped 68.5 per cent during the first quarter to reach $6.1 billion against $3.6 billion in Q1-2023.

Growth in GCC contract awards was evenly dispersed during Q1-2024 as three out of the six countries in the GCC recorded y-o-y growth in their project’s awards, including two of the largest projects markets in the region, Saudi Arabia and Qatar, while the remaining three countries witnessed declines.

In terms of sectors, the first quarter witnessed an increase in the value of projects awarded in the Gas and Oil sectors. Total GCC gas sector contracts awarded during the quarter jumped more than 19 times to reach $7.4 billion as compared to $382 million during the same 2023 period. On the other hand, the total value of contracts awarded in the GCC oil sector increased nearly seven times to reach $9.0 billion during the similar period, making the sector the biggest contributor in terms of absolute growth in value of contracts awarded in the GCC region during the quarter. The Emirates’ projects market maintained its spot as the second biggest projects market in the GCC during the quarter despite the decrease in its share of total GCC projects awarded from 30.9 per cent in Q1-2023 to 25.5 per cent in Q1-2024.

Currently the UAE has the second highest expected economic growth rate among the GCC countries for 2024 at 3.5 per cent with expectation to maintain its current course. The construction sector in the UAE once again comprised the biggest pie of new project awards, representing 52.2 per cent of total projects in the UAE during the quarter at $6.0 billion as compared to $8.4 billion awarded in Q1-2023 recording 28.9 per cent y-o-y decline. The industrial and oil sectors received most of the growth in contract awards during the quarter.