Driven by a boom in investment in real estate, the GCC projects market topped $2 trillion in late July, according to Gulf projects tracker MEED Projects.

Just over 65 per cent of project activity in the GCC is accounted for by real estate projects, with energy projects accounting for nearly 15 per cent of activity.

The engines for this growth have been Saudi Arabia and the UAE, which remain the region’s largest projects markets. The market with the greatest diversity is Saudi Arabia, where industrial projects are being boosted by Riyadh’s desire to diversify its economy.

TABLE: GCC projects by sector – % and total value ($bn)

Bahrain Kuwait Oman Qatar Saudi Arabia UAE
Construction 79% 67% 55.3% 49.9% 48.9% 84.3%
Industry 2.4% 0.8% 3.5% 1.9% 5.2% 1.9%
Oil and gas 6.8% 25.7% 19.7% 29% 17.7% 6.1%
Petrochemicals 1.9% 1.6% 11.3% 6.5% 13.2% 2.2%
Power 5.9% 3.3% 6.5% 8.8% 12.2% 4.6%
Waste and water 4% 1.6% 3.5% 3.9% 2.7% 0.9%
TOTAL VALUE OF PROJECTS ($bn) 39.6 266.9 92.5 214.6 492.4 904.3

Source: MEED Projects

Notes

  • BAHRAIN: Bahrain is the GCC’s slowest-growing projects market, less than doubling since 2005. While its petrochemicals and power projects are under way, only a quarter of its energy schemes are.

  • KUWAIT: The $86bn City of Silk may be one of the most ambitious projects in the Gulf, but Kuwait has a reputation for stifling bureaucracy and is the GCC’s slowest-growing market in 2008.

  • OMAN: Oman’s projects market is small, but is also the fastest growing, doubling in size over the past year. Activity is concentrated in the construction and oil and gas sectors.

  • QATAR: Doha has the best record when it comes to moving projects from the drawing board to reality. Some 70 per cent of its schemes are under way.

  • SAUDI ARABIA: Plans to build a series of economic cities across the kingdom to expand its industrial base, along with a major expansion of Saudi Arabia’s oil output, has led to strong growth.

  • UAE: The poster child of Gulf development, the UAE projects market is growing by 37 per cent a year. Real estate leads the way, accounting for 84 per cent of the country’s total project activity.


Future projects

The GCC projects market may be larger than ever, but it is set to continue growing over the next few years. Just 44 per cent of planned construction projects are under way across the region, highlighting the potential for what is already the GCC’s largest sector.

Saudi Arabia, where there are plans to build up to six economic cities, should provide some of the most lucrative contracts. The kingdom has the smallest proportion of its construction projects under way, at just 27 per cent.

In all, more than $1.2 trillion of work is planned over the course of 2008 and 2009.

For most contractors, the landscape will be reassuringly familiar. The economies and sectors that have dominated the current boom will continue to lead the region. The UAE, Saudi Arabia and Kuwait all have a significant amount of work planned, while Qatar is growing fast.

In terms of sectors, real estate and, to a lesser extent, oil and gas have the greatest amount of activity planned. Of the $552bn worth of projects planned in the UAE between now and 2011, $439bn worth is in the construction sector. The next largest sector is oil and gas, at $47bn.

Saudi Arabia has plans for $390bn worth of projects. Although construction dominates with $211bn worth of projects, there is a better spread across other areas.

Riyadh has the largest slate of petrochemicals, power and industrial projects, worth $51bn, $40bn and $21bn respectively.

Kuwait leads the way in oil and gas, with $63bn worth of projects planned.

However, with so many planned projects yet to get under way, there are potential difficulties. Any sign of a downturn in the Gulf economies, a further tightening of the contractor market or even the higher cost of raw materials could lead to projects being cancelled or shelved indefinitely.