High oil prices, the journey to net zero and Cop28 in the UAE, property markets, Saudi gigaprojects and deepening regional integration will all be key themes in 2023 that will have a strong bearing on some of the region’s largest projects and programmes of construction work. 

These are five of the key megatrends to watch in 2023:

Neom will be a focus of attention for the global construction sector in 2023.

Announced by Saudi Crown Prince Mohammed bin Salman in 2017 with a project value of $500bn, the project arguably failed to live up to expectations following its launch as efforts focused on preparing concepts and designs with little onsite construction activity. 

That changed dramatically in 2022 as contractors signed major contracts across the project’s key components. One key development was the signing of construction contracts for the $6.5bn Neom green hydrogen project, which involves building a hydrogen-based ammonia production facility powered by renewable energy.

Other large construction contracts were signed for tunnelling works for The Line, which is a 170-kilometre infrastructure corridor with a highspeed rail system and two rows of interconnected 500-metre-tall-mirrored buildings. Crucially these contracts were won by joint ventures comprising some of the world’s leading names in construction, indicating a shift of opinion within the international community towards the project and its opportunities.

There are plenty more contracts to be tendered and awarded in 2023. There is high-level political pressure for progress to be made on the project, and last year the mountain resort of Trojena was selected to host the 2029 Asian Winter Games giving the project a hard deadline.

As onsite activity gathers momentum, Neom will finally deliver on its promise of being the region’s largest project by far.  

Some say hydrogen will follow a similar story to the one experienced by solar power over the past decade, while others say it is reminiscent of the early days of liquefied natural gas (LNG).

The Middle East will play a leading role in deploying this relatively new technology following a slew of project announcements in recent years. The value of all announced hydrogen plants in the Middle East and Africa is now estimated to exceed $70bn. This total rises to more than $120bn if other elements, such as air separation units, export facilities and renewable energy complexes, are included. 

These projects are already resulting in contract awards for contractors, and as more schemes move into the construction phase, hydrogen will become an increasingly important industry for the region. 

Rail is back. After years of stalled projects, momentum has finally returned to the rail sector as regional governments press ahead with rail projects. 

The data shows the impact of these efforts. With $10.7bn of contract awards, 2022 was the best year for the region’s rail sector since 2013, according to data from regional projects tracker MEED Projects. 

READ MORE: Railway diplomacy

Even more encouraging is that headway is being made on planned projects expected to be tendered and awarded in the coming two years. The progress is across the region, but most noticeable in the GCC, where there has been a top-down drive to get the GCC Rail Project moving again following the Al-Ula declaration in 2021.

In 2022, design work started and progressed on a series of major rail schemes that should move towards tendering for construction contracts by the end of 2023. Once that happens, the region will be well on course to finally surpass its 2013 peak. 

Dubai’s property market was in rude health in 2022 with double-digit gains in values across multiple asset classes, including residential and commercial space. There was also a wide variety of new project launches, ranging from villa communities to tall towers and offshore islands (again).

The Covid-19 pandemic allowed Dubai to position itself as a home for the wealthy. Compared to other global cities such as London, New York, Paris and Hong Kong, property valuations in the emirate remain highly competitive, even after a year of strong growth. 

Prices are also still below the 2014 peak, which suggests the market has the potential to go even higher in 2023. Strong sales and rising prices due to limited supply have meant developers are launching new projects to satisfy demand. 

As projects become more daring and ambitious, a key question will be whether Dubai’s construction sector still has the appetite for major projects. Over the past five years, international players have left the market and, in 2020, the UAE’s largest general contractor, Arabtec Construction, filed for bankruptcy.

The plight of these companies is a reminder that Dubai’s property market is cyclical, and while there may be good times today, things may not be so good in the future. 

READ MORE: Real Estate Returns

It takes years to prepare the regulations and designs for nuclear power plants. Saudi Arabia is no different. It has been pursuing its nuclear strategy since 2016. While progress may appear slow, experience from other markets has shown that nuclear power plants become significant undertakings once they move into construction. For example, the contract to build Abu Dhabi's nuclear reactors, signed by a South Korean consortium in late 2009, was valued at $20bn. 

In Saudi Arabia, preparatory work is proceeding for its nuclear power programme, which is being pursued with a three-pronged strategy. Most of the nuclear power capacity will be developed through conventional, large-scale nuclear facilities, such as the one being studied by major consultants.

READ MORE: Nuclear power's strategic importance grows

The kingdom also plans to develop atomic energy through a series of smaller, system-integrated modular advanced reactor technology (Smart) nuclear power plants. The third pillar involves mining uranium resources to fuel the plants, as highlighted earlier this year by the kingdom's energy minister.

In March 2022, it was reported that Saudi Arabia had established a holding company to develop nuclear power projects in the country. Also over the past year, the King Abdullah City for Atomic & Renewable Energy (KA-Care) awarded three separate contracts for the legal, technical and financial advisory works for the project.

As these plans progress towards the tender of contracts, contractors are preparing themselves for the construction phase. For example, in late 2021, MEED reported that local contracting company Nesma & Partnerships had signed a memorandum of understanding with France’s Bouygues Travaux Publics to jointly execute civil works for a potential nuclear power plant project in Saudi Arabia.