The easy headline to shout from the Middle East projects market in 2012 was ‘Dubai is back’. While the UAE emirate reclaimed attention by announcing new, large-scale schemes, it was a mixed year for the rest of the region, with confidence improving, but the value of contract awards falling.

There are $304bn-worth of schemes under way according to the latest MEED ranking of the top 100 projects in execution in the Middle East. The list is dominated by Saudi Arabia, Iran and UAE, with a value of $96.3bn, $77.5bn and $48.7bn respectively.

Although Iran accounts for $77.5bn in total, and 25 projects within the Top 100, much of that figure ($30.9bn) is accounted for by the various phases of the South Pars gas field in the Gulf. The development is broken into 30 phases, due to the size of the gas field. The South Pars field sits adjacent to Qatar’s North Dome field and combined, the two cover an area of 9,700 square kilometres.

While Iran is moving forward with several projects, it is left to be seen whether they will all be completed on time, particularly with international sanctions increasingly taking a toll on the country’s economy.

The main contractors working on projects within the Top 100 projects ranking come from Saudi Arabia, South Korea and Iran, with approximately $63.6bn, $61.9bn and $58bn-worth of work.

Contractors from Iran work exclusively in their domestic market, while in Saudi Arabia, all but one contract is in the kingdom. South Korean contractors dominated the Middle East projects market in 2012, with Samsung Engineering accounting for the most contract work by value, securing $10.5bn-worth of contracts within the Top 100. However, overall, Saudi Binladin Group is comfortably the most active contractor within the Top 100 projects list, with $34.2bn-worth of contract awards. Samsung Engineering is the second most active contractor, although its work is spread across more countries.

Contractors from South Korea have won more work in the UAE than contractors from any other country. Within the Top 100, they have $23.3bn-worth of contracts, with contracting companies from the UAE a distant second winning $7.2bn-worth of work. South Korean contractors within the Top 100 projects have additionally won more work in the UAE than they have in any other country across the region.

Transport is the biggest sector by value in the Top 100 projects in execution, with $69.2bn-worth of projects, followed by gas ($62bn) and construction ($50.7bn). Most transport projects are in Saudi Arabia ($28bn) and Iran ($18.3bn), with the main schemes including the Tehran to Mashhad Electrification, Haramain High-Speed Rail Network and the seaport in King Abdullah Economic City.

Gas projects are dominated by the various phases of Iran’s South Pars field development, while major construction projects in execution include the Al-Shamiyah Development in Mecca and towers being built at King Abdullah Financial District. Most construction projects within the Top 100 are in Saudi Arabia ($27.2bn) followed by the UAE ($10bn).

Looking at the 50 Top projects planned or underway by value, while in 2011 these were worth $912.2bn, that has now risen 42 per cent to $1,561.9bn (this excludes any sub-megaprojects on the list to avoid double counting). However, while the rise suggests a rapidly growing market, 15 per cent, or $238.9bn-worth, of the sub-packages within these megaprojects are classed as on hold or cancelled. About $352.8bn of these projects, or 22 per cent of the total value, are in study, design, bid or execution.

2012 saw some of the larger schemes announced during the boom times re-emerging, particularly in the UAE. Among megaprojects, Dubai is back with its big, bold schemes. Work has picked up again in areas such as in Business Bay, Dubailand and Jumeirah Gardens, and Dubai announced plans to develop Mohammed Bin Rashid City. The megaproject is number five in the MEED Top 50 list of all projects, with five of the City’s sub-schemes also making the list.

Dubai alone accounts for $395bn-worth of the $664bn of megaprojects planned or under way in the UAE (this excludes sub-megaprojects on the list to avoid double counting).

Among all projects in the Middle East, and not just the Top 100 in execution, the UAE saw a 14 per cent growth in the value of contract awards for the first three quarters of 2012, totalling $20bn compared with $17.2bn the previous year. The majority of these awards were in construction ($9.5bn), followed by transport ($5.9bn) and oil ($3.6bn).

Abu Dhabi ranked as the most active emirate, with $11.9bn of contract awards in the first three quarters of 2012, followed by Dubai ($6.9bn) and Fujairah a distant third, spending $1.4bn.

While Abu Dhabi and Dubai spent roughly the same in construction projects ($4.1bn and $4bn respectively), Abu Dhabi spent heavily on oil ($3.3bn) and transport ($3.2bn) schemes.

The biggest contract in Abu Dhabi was a $2.87bn award at the delayed Midfield Terminal Complex at the emirate’s airport. This went to a consortium of Turkey’s TAV, Athens-based Consolidated Contractors Company, and the local Arabtec Construction. Other major contracts signed included packages within Emal’s aluminium smelter project, the quay wall for the harbour expansion at Das Island and Takreer’s carbon black and delayed coker project in Ruwais. Contract awards in Dubai included towers in Business Bay, infrastructure works on frond N on the Palm Jumeirah and a range of packages for Meydan City.

Despite the year-on-year growth, Abu Dhabi and Dubai saw the value of awards see-saw quarter-on-quarter, and both were reliant on public sector contracts. But the overall value of projects awarded reflects the growing confidence in the UAE, which has been largely unaffected by the Arab uprisings, and has benefited from tourism and being seen as a safe location to do business.

However, as the region emerges from the impact of the financial downturn, with new projects launched and a number of those on hold restarting, the picture is not one of total growth. Both Saudi Arabia and Qatar underperformed given expectations in 2012. Across Mena, the value of contract awards made in the first three quarters of 2012 fell by 9.4 per cent, from $134.1bn to $122.5bn.

Remove Saudi Arabia and Qatar from the equation however, and the remainder of the region saw a 7 per cent rise in the value of all contract awards during the first three quarters of 2012. That drop was caused by Qatar pushing major contract awards for the Doha Metro back to 2013, and in Saudi Arabia the failure of the promised spend on infrastructure in the country.

A combination of slow decision-making, bureaucracy and capacity crunch are thought to have caused a 41 per cent fall in the value of contract awards between the first and third quarters of 2012, when compared to the same period in 2011, from $50,217bn to $35,628bn. Those awards were bolstered by the value of petrochemical and industrial awards made during 2012. The value of construction awards fell 22 per cent, from $11.3bn in the first nine months of 2011 to $8.9bn during the same period in 2012.

Despite the weakness in Saudi contract awards, the kingdom saw a rise in combined spending for projects planned or underway, up from a little over $600bn in 2011 to around $860bn in 2012.

Forecast

The outlook for the projects market is expected to continue to improve in 2013, with $661.6bn-worth of projects earmarked across the Mena region. Construction, oil and transport will be the main sectors where money is spent either building new or expanding existing developments. A $4bn package within Kuwait’s delayed new refinery project, Baghdad’s $3bn rail line, Yemen’s $1.6bn steel plant expansion and the UAE’s $1bn waste to energy plant are the biggest projects by value due to move forward.

Between 2013 and the end of 2015, there are $1,458bn-worth of projects planned or under way, according to regional projects tracker MEED Projects. The UAE, Saudi Arabia and Algeria currently have the biggest plans, and in terms of sectors, construction and power dominate.

Power supply is a key issue for countries in the region, as growing populations and industrial usage strain existing infrastructure. And it is a power project that accounts for Algeria’s surprise position as number two in terms of project plans to 2015. It is currently studying plans for 22 gigawatts of solar power, at an estimated cost of $120bn, although that cost will be spread over a number of years. If plans move ahead, the project will supply 15 per cent of Europe’s electricity by 2050. A joint venture between Sonelgaz and Destertec Industrial Initiative (Dii) Eumena, a decision is expected in the first quarter of 2013, with completion scheduled for 2030.