Commentary
Yasir Iqbal
Construction writer

The timing could hardly be worse. Just as the regional public-private partnership (PPP) market was finding its stride, the Iran-US-Israel war has placed the region squarely inside a live conflict zone.

The question is no longer whether this disrupts the PPP market. It is how deeply, and for how long.

According to MEED Projects, the GCC has an active PPP pipeline worth over $400bn, with Saudi Arabia, the region’s most ambitious reformer, accounting for over $250bn of that total alone.

That pipeline now faces its sternest test. PPP structures are built on long-term revenue certainty and predictable operating environments, and conflict, by definition, delivers neither.

Disrupted airspace across the UAE, Qatar, Kuwait and Bahrain, swinging oil prices and a force majeure declaration from some of the world’s leading energy producers, including QatarEnergy and Bapco Energies, are not background tremors. They strike at the very infrastructure backbone that every bankable PPP transaction in the region depends upon.

Financing costs are tightening in tandem. War-risk premiums on Hormuz shipping have repriced sharply, and the strait carries roughly a quarter of global seaborne oil.

For project sponsors attempting to close long-dated infrastructure deals, the volatility makes lenders cautious and offtake agreements harder to underwrite. Expect financial close timelines to stretch, and debt margins to widen.

For international firms operating in the region, the calculus is uncomfortable but manageable. Those already embedded in the region will largely stay put because their pipelines are too valuable to walk away from, and GCC governments remain firmly committed to delivering transformational infrastructure.

New entrants, however, may hesitate. Corporate boards weighing allocations between the Gulf and lower-risk alternatives elsewhere may defer. Duty-of-care concerns around staff deployments are a genuine constraint that no premium return can easily offset.

Local players also face a subtler pressure. Some regional contractors and developers will inevitably look harder at markets with less geopolitical exposure. That instinct is understandable, but arguably premature. The domestic pipeline remains vast, government spending tied to national programmes is politically non-negotiable, and first-mover advantage in home markets is not easily recovered once lost.

Amid the most volatile geopolitical moment the region has witnessed in a generation, one thing is clear: the conflict has introduced real and lasting risk into a market that was, until recently, considered a relatively safe harbour.

Experts warn that the deals will now take longer to close, risk allocation will be tested harder, and some capital will go elsewhere. But regardless, the structural case for GCC PPPs, strong pipelines, sovereign commitment and maturing regulatory frameworks, remains intact. Markets that carry risk also tend to reward those with the resolve to stay.