GCC projects pipeline remains strong despite Q1 dip

Zawya

21-05-2025

Muscat – Following a record-breaking year for project awards, the GCC region is projected to experience another year of robust contracts activity, with the outlook for the GCC project market remaining strong for 2025, according to a new report released by Kamco Investment.
Numerous favourable factors across the GCC are expected to support momentum in the project market in 2025. Among these is notable growth in GCC hospitality projects during the year, Kuwait-based Kamco Investment said in its recently released GCC Projects Market report.
Overall, GCC countries hold approximately $1.54tn in contracts at the pre-execution stage, with Saudi Arabia accounting for the largest share (52.1%), the report said, citing MEED Projects data.
'A number of these projects are anticipated to be awarded within the next 6–12 months, indicating that 2025 could rival or surpass the award volumes of 2024,' the report noted. 'Roughly 34.3% of these contracts are in the design phase, while about 8.1% are currently under bid evaluation.'
Looking at country-specific project pipelines, the report highlighted that Saudi Arabia leads with $801.2bn in pre-execution stage projects, followed by the UAE ($312.3bn), Oman ($169.9bn), and Kuwait ($130.8bn), respectively.
According to MEED Projects data, healthcare contracts worth over $3bn are currently out to bid, signalling a strong project pipeline. Saudi Arabia leads with 51% of the total value of the GCC healthcare pipeline in 2025. In comparison, the UAE has $6.8bn in contracts under planning and execution, while Kuwait has $3.6bn in hospitality projects at similar stages.
Impact of US tariffs
The Kamco Investment report noted that, on the surface, there appears to be no immediate threat of US tariffs impacting the GCC projects market, as most GCC countries have limited trade exposure to the US in both imports and exports.
It further stated that the US maintains trade surpluses with five of the six GCC markets, and as a result, a basic tariff of 10% has been imposed. In addition, hydrocarbons – the primary export commodity of GCC nations – are among the goods exempted from tariffs.
'However, declining oil prices, driven by negative global economic sentiment linked to the effects of US tariffs on trade, may have an impact on GCC revenues and, consequently, their project funding capabilities. Reduced oil prices lead to lower government income across the GCC, which in turn may result in reduced spending on projects,' the report added.
Contracts decline in Q1
The total value of contracts awarded in the GCC declined after three of the six member countries recorded year-on-year decreases in project awards during Q1 2025. The total value of contracts awarded in the GCC fell by 26.8% year-on-year in Q1 2025, totalling $52.4bn – the lowest figure in the past eight quarters – compared to $71.5bn in Q1 2024.
'This downturn was primarily attributable to a sharp contraction in Saudi Arabia's project awards, despite resilient performance from the UAE, which recorded moderate year-on-year growth. The power and construction sectors were the main contributors to the decline in Qatar, Bahrain, and Saudi Arabia during Q1 2025,' the report said.
However, despite the significant year-on-year drop in Q1 2025, GCC project awards are projected to align with 2024 levels. MEED Projects, as cited in the Kamco Investment report, estimates that approximately $235bn worth of contracts are currently tendered or under bid evaluation across the GCC, with Saudi Arabia accounting for nearly two-thirds of this pipeline.
On a quarterly basis, Saudi Arabia's total contract awards plummeted by 49.9% in Q1 2025 to $17bn, down from $33.9bn in Q1 2024. In contrast, Kuwait's aggregate project awards surged by 197.6% in Q1 2025, reaching $1.4bn. Meanwhile, the UAE posted an 11.7% increase in contract awards during Q1 2025, totalling $26.1bn, up from $23.4bn in Q1 2024.
© Apex Press and Publishing Provided by SyndiGate Media Inc. (Syndigate.info).