2 days ago
Construction projects awarded by Gulf states plunge, as Saudi Arabia pulls back spending
The Gulf region commissioned its lowest number of construction contracts in more than three years according to data analysed by a regional asset manager, with Saudi Arabia falling the most as it curbs spending on megaprojects.
The Gulf region awarded $28.4bn in contracts in the second quarter of 2025, according to a July brief by KAMCO Investment, a Kuwait-based asset manager.
The overall value of all construction contracts awarded nosedived 58 percent compared to the same quarter last year.
Saudi Arabia led the plunge with contract awards falling 72.5 percent, and the UAE followed at 47 percent. The UAE overtook Saudi Arabia as the most active country in the Gulf region sealing new construction contracts.
"This downturn was primarily driven by a sharp contraction in project awards in Saudi Arabia, accompanied by a similarly weak performance in the UAE, which experienced a significant y-o-y [year-over-year] decline in contract awards during the period," the report said.
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The slump in commissioned projects comes amid a bevy of reports that suggest Saudi Arabia is curbing its ambitions on grand megaprojects designed to wean the country of its reliance on energy and diversify its economy.
Why Saudi Arabia can spend more money than it makes, even as oil prices drop Read More »
The kingdom has already had to scale back Neom, originally billed as a $1.5 trillion megacity project, which organisers claim will eventually be 33 times the size of New York City and include a 170km straight-line city known as "The Line".
Instead of 1.5 million people living in the city by 2030, Saudi officials now anticipate fewer than 300,000 residents. Meanwhile, only 2.4km of the city will be completed by 2030.
The Line is one part of Saudi Arabia's broader Neom project situated on its northwestern Red Sea coast that includes Red Sea resorts, industrial parks and a ski resort.
Last week, Semafor reported Neom is considering laying off up to 1,000 employees - an estimated 20 percent of its full-time staff. The website reported that Neom was weighing the layoffs as part of a broader overhaul that could also see more than 1,000 employees leave Neom's construction site on the kingdom's northwestern Red Sea coast, and relocate to Riyadh.
The wider Gulf region has been hit by falling oil prices. Brent, the international benchmark, was trading down about one percent on Tuesday at $68.53 per barrel. Oil prices have come down substantaily from their 2022 highs of around $100 per barrel.
