Gulf Construction Online - GCC project awards in Q2 down amid Qatar, UAE slump

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GCC project awards in Q2 down amid Qatar, UAE slump

01 August 2024

The total project awards in the GCC witnessed a major decline in Q2 plunging 19.7 per cent to $51.7 billion from last year’s figures of $64.3 billion mainly due to the unprecedented slump of project awards in Qatar coupled with steep fall in UAE contract deals, according to Kamco Invest, a regional non-banking financial powerhouse.

GCC contract awards were evenly distributed during Q2 as three out of the six countries in the GCC registered year-on-year growth in their project awards while the remaining three witnessed declines.

In terms of sectoral performance, a y-o-y decline in projects awarded in the construction sector during Q2 was one of the key factors that weighed down the overall contract awards in the UAE. The total project awards in this sector across the emirates recorded 62.9 per cent y-o-y decline to hit $4.4 billion over last year’s figure of $11.7 billion.

In context, the construction sector represented 47.1 per cent of the total contracts awarded in Q2 but dropped to 26.6 per cent of the total projects awarded in the UAE during the period.

However, despite the fall in the value of contracts awarded during the quarter, the UAE maintained its position as the second largest projects market in the GCC representing 31.6 per cent of the total contracts awarded in the region.

On Saudi Arabia, the Kamco Invest report said despite continuing lower oil output, the contracts awarded by the kingdom during Q2 recorded a 9.9 per cent increase to reach $30.6 billion as compared to $27.8 billion last year. One of the main drivers of project activity growth in Saudi Arabia during the quarter is the acceleration of Neom projects.

On the other hand, aggregate projects awarded in Qatar dropped 98.5 per cent y-o-y for Q2 to reach $162 million compared to $10.5 billion last year. This steep fall of Qatari contracts awarded has dragged down the aggregate growth of GCC contracts during Q2. Qatar has had one of its best years in 2023 in terms of value of contracts awarded as a result of the $10-billion LNG project awarded to develop the North Field South.

On Kuwait, the Kamco Invest report said the aggregate projects awarded jumped 33 per cent y-o-y to reach $2.3 billion up from $1.7 billion in Q2.

On the GCC Projects Market Outlook, Kamco Invest said the total value of projects being planned or in pipeline in the region stands at $3.5 trillion as of July 2.

Saudi Arabia accounts for the lion’s share of ongoing or upcoming GCC projects (54 per cent or $1.87 trillion) followed by the UAE which has $856.9 billion and Oman with estimated $245.5 billion worth of ongoing or upcoming projects, stated the expert, citing MEED Projects data.

However, when excluding ongoing contracts, the total GCC upcoming projects) reached $1.43 trillion as of July 2. Saudi Arabia dominated the projects in the pipeline representing 51.6 per cent ($737.2 billion) followed by the UAE which comprised 20.4 per cent ($291.4 billion).