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• 
  Middle East invests in giant airports

  25 July 2025

  

   

  The two largest airport construction projects in the world are in the GCC, according to UK data analytics firm GlobalData’s latest ranking of international airport projects. 

  Dubai’s Al-Maktoum International airport ranks first, followed by Riyadh’s King Salman International airport. 

  The scale and timing of the two projects underscores the region’s intention to remain a global travel hub.

  Demand has rebounded strongly following the Covid-19 pandemic and data for 2024 shows that air traffic is nearing or exceeding pre-pandemic levels at many airports. These tailwinds have continued into 2025 and are expected to continue for many years to come.

  Dubai pivots

  In Dubai, the expansion of Al-Maktoum International airport, which is also known as Dubai World Central, is back on the agenda after a five-year hiatus. The expansion project was launched in 2014 and was put on hold as the emirate focused on delivering infrastructure for Expo 2020 and then dealt with the economic impact of the Covid-19 pandemic. 

  With a rebound in air travel and growing operational pressure at Dubai International airport (DXB), the project was relaunched in 2024. 

  Once complete, Al-Maktoum will cover an area of 70 square kilometres (sq km), which will make it five times larger than DXB. It will have five parallel runways, five terminal buildings and up to 400 aircraft gates. It is designed to eventually handle 260 million passengers and 12 million tonnes of cargo a year, making it the largest passenger airport in the world by capacity. 

  The government has said that operations will shift from DXB to Al-Maktoum within the next 10 years. The project is also driving housing and commercial development in the surrounding area, with plans to accommodate up to 1 million residents around the new airport zone.

  Construction is already progressing. In May, Binladin Contracting Group won a AED1bn ($272m) contract for the second runway, and Abu Dhabi-based Tristar E&C is delivering enabling works for the terminal.

  Dubai Aviation Engineering Projects (DAEP), the government entity managing the development, has also issued tenders for the first phase of construction, which is expected to be completed by 2032. 

  The initial phase includes five substructure packages covering tunnels, technical infrastructure and a seven-level West Terminal spanning 800,000 square metres. This terminal alone will have an annual capacity of 45 million passengers.

  DAEP has also tendered a contract for the airport’s automated people mover system, which will operate beneath the apron and link 14 underground stations across the terminals and concourses. International firms including Alstom, Hitachi and CRRC are expected to bid.

  Unlike in 2014, when Dubai had some time on its side, the need for expansion today is becoming increasingly urgent. While DXB remains the world’s busiest airport for international passengers and the second busiest overall with 92.3 million travellers in 2024, it operates with only two runways and is approaching its physical limits. 

  As Emirates begins flying smaller Airbus A350s with fewer seats than the A380s the company is replacing, the number of aircraft movements is expected to increase, further straining capacity. DXB already ranks among the world’s busiest airports for aircraft movements. Without additional runway infrastructure, future growth will be constrained.

  Riyadh’s global ambitions

  While Dubai expands to maintain its lead in aviation, Riyadh is seeking to establish itself as a global hub. 

  Backed by sovereign wealth vehicle the Public Investment Fund, the King Salman International airport project represents a central pillar of Saudi Arabia’s $100bn aviation and economic diversification strategy. 

  The airport will cover 57 sq km, integrating the existing King Khalid International airport and adding six parallel runways, several new terminals and a 12-square-kilometre mixed-use logistics and real estate zone.

  By 2030, Riyadh aims for the airport to accommodate 120 million passengers annually, rising to 185 million by 2050. It will also target 3.5 million tonnes of cargo a year. 

  The airport will anchor the kingdom’s wider aviation strategy, which seeks to triple annual passenger traffic to 330 million, expand cargo throughput to 4.5 million tonnes and grow Saudi Arabia’s network to over 250 global destinations.

  While Dubai expands to maintain its lead in aviation, Riyadh is seeking to establish itself as a global hub

  The newly launched Riyadh Air will operate from the new hub, complementing Saudia and positioning the capital as a central node in global travel.

  Contractors are already competing for major construction packages. The fourth runway package and a separate contract covering the Iconic Terminal and Terminal 6 for low-cost carriers are out to tender. 

  Several international firms have been appointed to design and delivery roles. Foster & Partners is leading the masterplan and terminal architecture, Jacobs is supporting runway and infrastructure design and Bechtel is delivering the terminal programme. Parsons has taken responsibility for airside and landside works and Mace is overseeing overall delivery management. Local firm Nera is handling the critical airspace design consultancy.

  Both airports, along with other hubs and airport projects that are being developed in the region, will help the Gulf remain a key player in global aviation for decades to come. 

  Main photo: Artist’s impression of the phase two expansion of Dubai’s Al-Maktoum airport. Credit: Dubai Airports

  Global air travel shifts east

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  Colin Foreman
• 
  Gulf banks navigate turbulent times

  25 July 2025

  

   

  Much can change in a year, as GCC banks are finding out. They face a sharply different environment in mid-2025 than they did at the same point last year. In 2024, GCC banks’ immediate challenge was the downward shift in interest rates dictated by the US Federal Reserve, prompting a drop in interest income and forcing lenders to secure other forms of revenue.

  This year, the political and economic disruption wrought across much of the world has changed the calculus for regional lenders.

  While lower interest income remains an ongoing challenge, a broader mix of issues requires attention, including tighter liquidity, higher cost of funds and the need to continue supporting domestic diversification agendas. 

  The good news for GCC banks is that, on the whole, the positives are outweighing the negatives.

  According to Kamco Invest research, GCC banking sector bottom-line growth was steady in early 2025, with Q1 2025 witnessing expansion of 8.6% to reach $15.6bn, a record for that quarter.   

  This increase came despite a decline in net interest income of 1.7% in year-on year terms, and was mainly led by higher non-interest income, lower operating expenses and a decline in impaired loans.   

  Position of strength

  Strongly performing Gulf economies over successive years have created favourable conditions for banks, offsetting the impact of lower interest rates. 

  “Throughout this period of higher oil prices, GCC banks were building their capital buffers because profitability was good,” says Redmond Ramsdale, head of Middle East bank ratings at Fitch Ratings.

  “Asset quality in most of these countries has been improving. So the banks are in quite a good position with the buffers they have built.”

  Strongly performing Gulf economies over successive years have created favourable conditions for banks, offsetting the impact of lower interest rates

  Despite the economic volatility seen in the first half of 2025, Gulf banks have proved resilient, even if President Donald Trump’s tariffs remain a challenge for US trading partners globally, including those in the Gulf. 

  “Tariffs are likely to have limited direct impact on GCC banks. It’s more about what is the importance of tariffs on oil prices. Lower oil prices are negative for the GCC because oil is still the main component of government revenues – and that’s what effectively translates into lending or financing growth for the banks,” says Ramsdale. 

  Credit growth is holding up strongly, which in part reflects the resilience of economic diversification programmes in the GCC. 

  Demand for credit is also holding up, as is government spending – typically a key determinant of economic confidence, and a driver for non-oil GDP.

  The consensus among analysts is that credit growth will remain in the high single-digits for the GCC as a whole, and will be still higher in Saudi Arabia. 

  “In Saudi Arabia we forecast that the loan growth will remain strong this year, and will be driven more by corporate lending as projects around Vision 2030 are being implemented — less so by mortgages,” says Mohamed Damak, senior director, financial services at S&P Global. 

  According to Damak, mortgages will continue to grow because there is still demand. “But the big story for Saudi banks is the recourse to external funding,” he says. 

  “They have been issuing debt on the international capital markets in order to mobilise liquidity to be able to continue to finance their growth, because deposit growth is not sufficient to finance all lending growth.”

  This is the backdrop to the extensive issuance being seen in the kingdom and other Gulf markets. Saudi National Bank (SNB) completed the issuance of $1.25bn in Tier 2 US dollar capital notes in June, with order books exceeding $4bn. 

  It is not just Saudi banks that are in issuance mode. GCC banks have about $2.2bn in US dollar-denominated Additional Tier 1 (AT1) instruments with first call dates due in 2025, and a further $3.1bn in 2026, according to Fitch Ratings. This comes off a strong year for Gulf bank debt issuance in 2024, when $42bn of issuance was seen – the previous record was in 2020 with about $26bn. 

  First-half 2025 issuance stands at $38bn, suggesting this year is going to set a new record. Maturities valued at $16bn are due in 2026, with $13bn due in 2027, a further driver for banks to tap the debt capital market. 

  At least three Saudi lenders have issued AT1 dollar-denominated capital Islamic bonds (sukuk) this year as they have moved to take advantage of tighter spreads and strong investor demand. 

  Saudi banks – in line with previous years – are driving loan growth, with UAE lenders not far behind. 

  “Our forecast for credit growth in Saudi Arabia for this year is between 10% and 12%, which is still very strong growth, and the highest in the region. That is driving quite strong profitability, despite the fact that they are funding this growth with more expensive funding,” says Ramsdale.

  The kingdom’s current and savings account deposits are not growing at anywhere near the pace that loans or financing is growing, notes Fitch, so banks are filling that with term deposits or external liabilities.

  The higher reliance on foreign funding has led to tighter liquidity. “Loan growth is exceeding deposit growth, so banks need to issue,” says Ramsdale.

  Another reason for issuance is the need for dollars, which are being used to fund major government projects, notably in Saudi Arabia, where about 40% of the GCC bank issuance is located.

  Shrinking liquidity

  The prospect of tightening liquidity, as deposits prove trickier to attract, is not a cause for undue concern. There are ample tools at the central bank’s disposal to manage the situation.

  “The Saudi Arabian Monetary Agency still has a lot of [deposits from government-related entities] sitting in its accounts that can be deployed into the banking sector. If liquidity gets too tight, it can do so,” says Ramsdale.

  Stress-testing exercises appear to bear this out. According to S&P Global, all GCC banking systems have enough liquidity to sustain funding outflows, with the exception of Qatar, where there is a shortfall of $9bn under its hypothetical stress scenario. This is due to the fact that Qatar starts with a higher external debt compared to all other  regional countries. 

  This $9bn is something the authorities can easily absorb, however, as demonstrated by the strong track record of support. 

  S&P stress tested the banking systems on three metrics – the outflow of external debt, the potential outflows of local private sector deposits and the implication on the economy and on the asset quality indicators.

  The ratings agency looked at the top 45 regional banks. Under the first scenario, the outflow of external debt, 16 of the banks would show losses of around $5bn in cumulative terms, says Damak. 

  For the second scenario, 26 out of the top 45 would be loss-making for a total amount of around $30bn. 

  “But now, when you compare the $30bn to how much profit these banks have made over the last year – about $60bn – it means that they have the capacity to absorb the problem without any significant impact on capitalisation,” says Damak.

  UAE banks’ massive debt external asset position makes them fairly resilient to potential stress-related external capital outflows, notes Damak.

  

  Big banks dominate

  At the individual level, the region’s large ‘national champion’ banks continue to dominate banking systems. Some of these institutions have posted impressive early-year performances.  

  For example, Al-Rajhi Bank, the largest lender in the GCC by market capitalisation, reported a 34% year-on-year increase in net profit in Q1 2025. It is reaping the benefit of the kingdom’s surging credit demand. Booking healthy profits on the back of strong loan demand, from both corporate and consumer sectors, comes relatively easily in this context.  

  However, where loan growth is weaker, banks’ earning performances have been commensurately negatively affected. 

  Looking ahead, profitability is expected to be marginally down this year

  For Qatar National Bank, which is considered the largest Qatari bank by assets, while Q1 net profit reached $1.2bn, this
  was only up by a couple of percentage points compared to the same period last year, indicative of less robust credit growth in Qatar.  

  “The largest banks in the GCC – the likes of SNB and Al-Rajhi in Saudi Arabia, First Abu Dhabi Bank and Emirates NBD in the UAE and National Bank of Kuwait and Kuwait Finance House in Kuwait – tend to have around 50%-60% of the total banking system, which gives them an advantage in terms of efficiency, delivery and market access,” says Ashraf Madani, a senior analyst at Moody’s Financial Institutions Group. 

  “These banks are highly rated in terms of their standalone and overall deposit ratings and we expect their advantage to continue.” 

  Looking ahead, profitability is expected to be marginally down this year, says Madani, reflecting some pressure on the net interest margins because of the lower rates since Q4 last year, and also the expectation that credit costs should normalise compared to the previous year.

  One of the big plus-points for Gulf banks is the improvement in asset quality witnessed in the past year, suggesting that Gulf economies’ post-Covid recovery has helped reduce bad loans. 

  “We’re seeing non-performing loans heading in the right direction, trending lower, and that’s basically because of the strong performance of borrowers, and the denominator effect, whereby an increase in the overall size of the loans will lower overall ratio,” says Madani.

  Other factors supportive of loan quality are regulatory changes in the UAE, which has allowed UAE banks to write off some of the legacy problem loans, another factor that is likely to move the headline non-performing loan ratio down.

  Given the political and economic turbulence witnessed in the first half of the year, Gulf bank chiefs will not be minded to make rash predictions about future conditions. Even so, the resilience on display, and the healthy loan appetite, will likely boost confidence that lenders in the region can withstand further headwinds. 

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  James Gavin
• 
  Consultants shortlisted for new Egyptian railway

  25 July 2025

  

   

  Four European consulting groups have been shortlisted for a contract to provide project implementation support and construction supervision services for a new railway in Egypt, linking Robeiky with Belbeis via 10th of Ramadan.

  France’s Systra, Italy’s Italferr, and two joint ventures comprising Germany’s DB E&C with France’s Egis and Germany’s SSF International with the local Ehaf will now be invited to bid for the contract by the project client, Egyptian National Railways (ENR).

  The project, which has an estimated value of just under $200m, comprises the supply and installation of railway tracks, and signalling and telecommunication systems.

  The new line will connect the 10th of Ramadan Dry Port project (DP10) to ENR’s main network and, in parallel, allow freight traffic from southern ports towards the north of the Nile delta to bypass the Cairo railway node and save time. It will also provide a railway link between Belbeis and DP10 for commuting traffic.

  It includes seven stations: Robeiky, Industrial Zone 1, Industrial Zone 2, Kilometre 14, the 10th of Ramadan interchange station connecting to the Cairo–New Capital LRT network, DP10 and Belbeis.

  The project alignment is divided into two sections. The first part of the railway line, with a length of 48 kilometres (km), connects the Robeiky and Belbeis stations. 

  The second part of the railway line is a 12km branch link from the main line junction to the border of the planned DP10 station, served by parking and a shunting yard.

  Four competing contracting alliances are bidding for the construction works. They are:

  • Alstom/Concrete Plus/Rowad Modern Engineering (France/local/local)
  • Dhaka Bangladesh Group
  • CBS Group/Orascom Construction (Spain/local)
  • Hitachi/Mermec/Salcef/El-Hazek Construction (Japan/Italy/Italy/local)

  The project is being financed with a €35m ($41m) loan from the European Bank for Reconstruction & Development (EBRD) and a €71m facility from Agence Française de Developpement (AFD). ENR will provide the remaining equity.

  

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  Edward James
• 
  First foreign firm takes ownership of Saudi football club

  25 July 2025

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  Saudi Arabia’s Ministry of Sport, in collaboration with the National Centre for Privatisation & PPP (NCP), has announced the winning bidders of the rights to own and operate three sports clubs in the kingdom.

  The agreement marks the first time a foreign investor has owned a Saudi football club, with the US-based investment firm Harburg Group winning the ownership rights of Al-Kholood football club.

  The club competes in the Saudi Pro League and is based in the city of Ar-Rass, in the Al-Qassim province of the kingdom.

  Riyadh-based firm Nojoom Al-Salam Holding will assume the ownership of Al-Zulfi club. The club is based in Al-Qassim province and competes in the Saudi First Division League, the second tier in the Saudi Arabian football league system.

  Medina-based firm Awdah Al-Biladi & Sons acquired the ownership of Al-Ansar football club. The club is based in Medina and plays in the Saudi Second Division, the third tier of Saudi Arabia’s football league.

  In April, MEED reported that the Ministry of Sport, in collaboration with the NCP, was expected to announce the winning bidders for owning and operating six sports clubs soon.

  According to local media reports, the ministry received more than 22 offers for the acquisition of clubs, including bids from foreign companies.

  The other clubs that were opened for privatisation include Alnahdah Sports Club (Dammam), Alokhdood Sports Club (Najran) and Alorobah Sports Club (Sakaka City).

  In August last year, MEED reported that Riyadh was seeking investor interest in owning and operating six sports clubs in the kingdom.

  The announcement followed a notice from the ministry in July that approval had been given for the privatisation of 14 sports clubs in the kingdom.

  “The move is part of the ongoing implementation of the sports clubs’ investment and privatisation project launched by the Crown Prince, in line with the goals of Saudi Vision 2030. It also aims to provide opportunities for the private sector to participate in building and developing the sports sector, thereby benefiting national teams, clubs, fans and all sports practitioners,” NCP said in an official statement.

  Saudi Arabia has major plans to develop its sports infrastructure. The kingdom will likely invest hundreds of billions of dollars in developing the required infrastructure to host the 2034 Fifa World Cup.

  

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  Yasir Iqbal
• 
  Maghreb economies stabilise

  25 July 2025

  Download the PDF

  

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  MEED’s August 2025 report on the Maghreb includes:

  > GOVERNMENT: Pursuit of political stability dominates Maghreb
  > ECONOMY: Maghreb economies battle trading headwinds
  > OIL & GAS: Oil company interest in Libya increases 
  > INDUSTRY: Algeria’s industrial strategy builds momentum
  > POWER & WATER: Slow year for Maghreb power and water awards
  > CONSTRUCTION: World Cup 2030 galvanises Morocco construction

  To see previous issues of MEED Business Review, please click here

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  MEED Editorial