(MENAFN- Khaleej Times) The UAE maintained its spot as the second-biggest projects market in the region as projects awarded across the GCC increased 20.3 per cent year-on-year, defying regional and global geopolitical challenges.
Projects awarded in the UAE during the first quarter dipped marginally 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 upswing 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 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, shrugging off underwhelming GDP growth projections by the IMF and continuing its strong non-oil growth rate run.
Saudi Arabia, after being aggressive on all fronts of project development, has shown a change in strategy and is expected to have a more focused approach. The kingdom is prioritizing 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.
“The consistent elevated trend in GCC contract awards underlines the entrenched resolve of GCC governments to see through their diversification projects, as well as state funding support,” said the study.
Growth in GCC contract awards was evenly distributed 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 a jump 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 shrugging off the global economic uncertainty and the impact of ongoing conflicts in the wider Mena region.
The UAE's non-oil economic sector which has contributed around 70 per cent of the growth during 2023 is expected to further improve in 2025. Abu Dhabi Executive Council has approved the launch of 144 projects across the emirate estimated to be worth around $18 billion. The lion's share of the fund or over $16 billion has been approved for the development of housing schemes and public facilities while $1.9 billion has been earmarked for education and human capital related projects.
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. The value of projects in the oil sector jumped over 17 times to reach $3.2 billion in Q1-2024 as compared to $190 million in Q1-2023. Similarly, the total value of projects awarded in the power sector jumped over 12 times to reach $1.1 billion in the first quarter as compared to $86 million in Q1 2023.
One of the most notable projects awarded in the UAE during the quarter was the $820 million Saadiyat Lagoons project. Aldar Properties awarded the project to Innovo Build, a local contractor. The scale of the project includes the construction of around 975 villas as part of package three of the development.
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