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• 
  Another bumper year for Mena projects

  25 December 2024

  

   

  The Middle East’s projects market in 2024 has been fuelled by the same heady cocktail of favourable oil prices, continued investment into oil and gas projects, government infrastructure spending, the energy transition, real estate investment and economic diversification that propelled the total value of awards in 2023 to record levels.

  By the end of October 2024, there were $262bn of contract awards across the Middle East and North Africa (Mena) region, according to regional projects tracker MEED Projects. By the end of the year, the 2024 total may top the $290bn recorded in 2023. 

  While economic diversification is a priority for governments across the region, oil and gas remains a key sector for project awards. The three largest contract awards in 2024 were from the sector.

  The top-ranked contract by value was a $20bn deal awarded to Iranian companies Petropars, Oil Industries Engineering & Construction, Khatam Al-Anbiya Construction Headquarters and Mapna Group for the South Pars gas field pressure-boosting project in Iran by Pars Oil & Gas Company.

  Next was the $8bn deal won by China’s Hualu Engineering Technology Company for delivering the Al-Faw refinery in Iraq for Southern Refineries Company.

  The third-largest award was a $5.5bn contract won by a joint venture of France’s Technip Energies, Japan’s JGC Corporation and the UAE’s NMDC Group for the Ruwais low-carbon liquefied natural gas terminal project by Abu Dhabi National Oil Company (Adnoc).

  These contract awards mean that the oil and gas sector accounted for 32% of the $262bn total that was recorded in the Mena region by the end of October 2024.

  Breaking down the sector into oil and gas separately reveals a telling trend. Oil accounts for 12% of awards, while gas accounts for 20%. These numbers reflect the growing importance of gas as a transition fuel that is cleaner and more environmentally friendly than oil, but still provides the dependable energy that many renewable alternatives still do not offer. 

  Strong performances

  Construction is the second-largest sector after oil and gas, accounting for 23% of awards. Its significance has dropped in 2024 compared to 2023, when it accounted for 32% of contract awards. 

  In terms of value, there were $68bn of contract awards in 2024 until the end of October. If the same pace is maintained during November and December, the 2024 total is expected to be about $81bn, which falls short of the 2023 total of $97bn. 

  While the total value of contract awards may have dropped, there was the largest construction contract award on record in 2024 – a $4.7bn deal secured by Italian contractor WeBuild for the construction of three dams for the Trojena mountain resort at Saudi Arabia’s Neom gigaproject. 

  The power sector accounted for 18% of the total awards during the period, the largest of which was the $5.3bn contract won by Saudi Arabia’s Alfanar Projects and China Electric Power Equipment & Technology Company for the 7,000MW Saudi Central, Western and Southern Regions high-voltage direct current overhead transmission lines project being developed by Saudi Electricity Company.

  When analysed by country, Saudi Arabia and the UAE dominate the market, and together they account for over 60% of contract awards across the region in 2024 up to the end of October. 

  As the region’s largest economy, it is unsurprising that Saudi Arabia accounts for the largest share, with 38.6%, followed by the UAE, which had 22%. The next most significant country was Iran, which came in a distant third with 8% of contract awards. 

  The outsized contribution of Saudi Arabia and the UAE reflects the relative economic stability found in the GCC compared to other countries in the region that are grappling with the impact of conflict and other associated financial pressures. 

  Looking beyond the contract awards numbers, the biggest project announcement in 2024 came in April, when Abu Dhabi investment vehicle ADQ released details of plans to invest $35bn in Egypt. The plans involve ADQ acquiring the development rights for Ras El-Hekma, a planned new city on Egypt’s northern Mediterranean coast, for $24bn. 

  The development has been billed as having the potential to attract over $150bn in investment.

  In October, ADQ appointed its subsidiary Modon Holding as the master developer for Ras El-Hekma. Modon will act as the master developer for the entire development, which covers more than 170 square kilometres (sq km). 

  Modon will develop the first phase, which covers 50 sq km, and the remaining 120 sq km will delivered with private developers.

  Key partners for delivering the project have already been found. For construction, Modon has signed a framework agreement with Egyptian firm Orascom Construction to serve as the primary contractor for the project’s first phase. 

  Modon also signed a deal with Abu Dhabi National Energy Company (Taqa) for developing, financing and operating greenfield utility infrastructure projects, water desalination projects, electricity transmission and distribution projects and wastewater projects at the Ras El-Hekma development.

  While economic diversification is a priority for governments across the region, oil and gas remains a key sector for project awards

  Future prospects

  Looking ahead, the performance of the projects market in 2025 will depend  on the favourable macroeconomic conditions remaining in the GCC, which if the other four members of the six-nation bloc are added, accounted for nearly 72% of the Mena region’s total contract awards during the first 10 months of 2024. 

  The key metric to watch in 2025 will be the oil price. In mid-November, the price of Brent Crude was $72 a barrel, which is below what many in the region, including Saudi Arabia, require if they are to maintain their project spending plans. 

  The outlook for oil prices is uncertain and after oil producers’ group Opec cut its global demand growth forecasts for both 2024 and 2025 for the fourth time, highlighting economic weakness in China, India and other regions, there are concerns prices will dip in 2025. 

  The election of Donald Trump as US president adds to those concerns. He has promised to “drill, baby, drill”, and a sharp uptick in output from the US could cause oil prices to soften further.

  Trump is also a protectionist and has said ‘tariff’ is his favourite word. Most of his new tariffs are expected to be aimed at China, which could mean that Chinese companies look to other markets that remain open to them, including the Middle East.

  The appeal is clear to see. Chinese contractors already command a dominant position in the region – particularly in North Africa and Iraq – and Chinese companies will find great appeal in affluent markets such as Saudi Arabia and the UAE, which can offer large-scale project opportunities.

  The other metric that will drive the projects market in 2025 is real estate. In the UAE, much of the ongoing development work is supported by the buoyant property market, particularly in Dubai, which has grown strongly throughout 2024. 

  According to a report by data and analytics company Reidin, property sales in the UAE reached AED46.52bn ($12.7bn) in October 2024, marking a 55% year-on-year increase. Demand also remains robust, with 19,500 transactions recorded in October, reflecting a 72% rise compared to the same period in 2023. 

  Looking ahead to 2025, Reidin says that the outlook remains optimistic as sustained demand, rising property values and steady inventory turnover are all expected to continue driving growth. 

  While the forecast supports a positive outlook for construction in the UAE, those who have seen Dubai’s property market collapse before will be keenly watching the data in 2025.

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  Colin Foreman
• 
  Egypt 2025 country profile and databank

  25 December 2024

  Register for MEED's 14-day trial access 

  

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  MEED Editorial
• 
  Dubai focuses on infrastructure

  24 December 2024

  

   

  It feels like Dubai has never had it so good. Economic growth remains robust, and as the outlook for other countries proves to be shaky, the emirate’s lifestyle proposition is attracting wealthy residents from around the world. 

  As the city grows, it is becoming increasingly apparent that its infrastructure is strained and needs upgrading. An examination of the construction contract awards data over the past 10 years suggests why. After reaching a peak in 2017, the value of construction contracts in Dubai slumped to a low of less than $10bn a year in 2020 and 2021 before recovering in 2022 and growing strongly in 2023. 

  Those new projects awarded during the recovery phase are still under construction and have not yet positively impacted Dubai’s infrastructure offering.

  Dubai budget

  As these pressures build, Dubai announced its budget for 2025 on 29 October 2024 with a 9% increase in government spending, and an extra $1.6bn for construction and infrastructure compared to the approved budget for 2024. 

  Of the AED86.26bn ($23.5bn) of planned spending, 46%, or AED39bn ($10.6bn), will be allocated for construction and infrastructure schemes. “These projects encompass roads, tunnels, bridges, transportation systems, sewage stations, parks, renewable energy facilities and the rainwater drainage network development plan,” the emirate’s finance department said in a statement.

  “This also includes the recently announced Al-Maktoum airport development project and other initiatives supporting quality of life and promoting smart and sustainable transportation strategies in Dubai.”

  The 2024 budget had AED33.2bn of spending allocated for construction and infrastructure.

  Population boom 

  In the long term, the driver for infrastructure spending is population growth. The Dubai 2040 Urban Master Plan expects Dubai’s population to reach 5.8 million by 2040, up from 3.3 million in 2020. The daytime population is forecast to rise from 4.5 million in 2020 to 7.8 million in 2040.

  In the short term, increased construction spending will also help the emirate overcome some of its most pressing infrastructure challenges. Traffic has developed into a major issue in Dubai and, over the past year, the Roads & Transport Authority (RTA) has pressed ahead with a series of road projects aimed at alleviating congestion. The most recent road project to be announced is the AED696m upgrade to the Trade Centre roundabout.

  In early November, the RTA outlined plans to tackle traffic with improved urban mobility and infrastructure throughout the emirate. The estimated AED16bn ($4.3bn) 2024-27 Main Roads Development Plan comprises 22 projects across Dubai’s road network. It includes the construction of new roads and bridges at several key locations across Dubai.

  The most immediate is the Al-Mostaqbal Road project, which, according to the official statement, will be awarded by the end of 2024. The project includes the construction of bridges and tunnels totalling 6.2 kilometres (km), increasing the road capacity from 9,000 to 12,000 vehicles an hour.

  The Latifa Bint Hamdan Street development is set to commence in 2025. This project covers 12.2km of road network from its intersection with Al-Khail Road to Emirates Road. The project also includes 8.1km of bridges and will add capacity for about 16,000 vehicles an hour in both directions.

  The Meydan Road development project includes 10.6km of roads, 3.3km of bridges and three tunnels totalling 1.5km. The project is expected to add capacity for 22,000 vehicles an hour in both directions and reduce the travel time from Umm Suqeim Street to the extension of Meydan Street to just four minutes.

  After reaching a peak in 2017, the value of construction contracts in Dubai slumped to a low of less than $10bn a year in 2020 and 2021 before recovering in 2022 and growing strongly in 2023

  A project encompassing Umm Suqeim and Al-Qudra streets covers a 16km stretch from the Jumeirah Street intersection to Emirates Road. The project includes the development of four intersections, including 2.5km of bridges and 2km of tunnels. It will increase road capacity from 8,400 to 12,600 vehicles an hour.

  The Al-Fay Street development project will extend from Al-Khail Road at its intersection with Sheikh Mohammed Bin Zayed Road, passing through Sheikh Zayed Bin Hamdan Al-Nahyan Street up to Emirates Road. It includes 12.9km of roads with five intersections and 13.5km of bridges. The project will add capacity for about 64,400 vehicles an hour.

  The Al-Safa Street development project will stretch from Sheikh Zayed Road to Al-Wasl Road. The project includes the construction of 2.1km of tunnels, including a two-lane tunnel providing direct access from Al-Safa Street to the City Walk residential development, as well as 650 metres of bridges. The project will increase the road capacity from 6,800 to 9,400 vehicles an hour.

  The RTA also plans to expand the Dubai Tram network and is carrying out a study on deploying trackless tram systems at eight locations across Dubai. The self-driving tram system will operate on virtual tracks, using camera-guided painted lines on dedicated lanes. The electricity-powered system will have three carriages with a capacity of 300 passengers and an operational speed of 25 to 60 kilometres an hour.

  Other plans include extending Dubai’s dedicated bus and taxi lanes to 20km and expanding the cycle track network.

  A new metro line is also planned. In October, contracting consortiums submitted bids for the contract to complete a new Blue Line. Revised offers were submitted in late November, with the lowest-priced base offer coming in at AED19.8bn. The project was given a budget of AED18bn when approved by the government in late 2023. 

  Airport plans

  Another infrastructure concern is maintaining Dubai’s status as a global aviation hub. Dubai International airport is operating at close to capacity, and with no room to add to its two existing runways, a major new airport project is planned at Al-Maktoum International airport. Designs for that project, valued at $35bn, were approved by the government in April and all operations at Dubai International are scheduled to move there within 10 years. Tendering for major construction contracts is expected to start in 2025. 

  Drainage is also a concern, with widespread flooding in April this year exposing the shortcomings of the emirate’s infrastructure. In June, the government approved a AED30bn project known as Tasreef, which will enhance the capacity of Dubai’s rainwater drainage system by 700%, covering all areas of the emirate.

  The sewage system will also be upgraded with the $22bn Dubai Strategic Sewerage Tunnels project, which will be delivered as a public-private partnership. 

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  Colin Foreman
• 
  Transport projects driven by key trends

  24 December 2024

  

   

  Two key trends are driving the region’s transport projects. The first is a longstanding competitive advantage based on the Middle East’s strategic location, while the second is a renewed drive for regional integration. 

  Over the past 20 years, the Middle East’s aviation sector has been transformed. Dubai has established itself as the world’s busiest international airport, while other regional airports have become significant aviation hubs, albeit on a smaller scale. 

  The logic is simple. The Gulf is within an eight-hour flight of most major destinations and two-thirds of the world’s population. It is also strategically located between established markets in Europe and North America and emerging markets in Africa and Asia. 

  Over the past decade, major projects have been undertaken to upgrade capacity and harness more of the global aviation market. As these projects were completed, 2024 became a turning point and the focus pivoted to two new projects that will be the largest airports in the region by far.

  Major airports

  Riyadh’s King Salman International airport was launched at the end of 2022. The airport, which will be built to replace the existing King Khalid International airport, aims to accommodate up to 120 million passengers by 2030 and 185 million by 2050.

  In 2024, the project took several steps forward: it appointed UK-based Mace as a delivery partner; tendered contracts for delivery partner roles for the terminals, airside works and landside infrastructure; and began to approach contractors for construction work on the project. 

  The region’s other major airport scheme is the $35bn expansion of Dubai’s Maktoum International airport. The project, which had been planned for over a decade, had new designs approved in April. It will have a passenger handling capacity of 260 million passengers annually – the world’s largest. 

  Early infrastructure contracts have been awarded since the designs were approved, and contractors have been briefed on main construction packages that are expected to start in 2025. 

  Building connections

  The other key drive for the region’s transport projects is integration. Following the 2021 Al-Ula agreement, the GCC has been pressing to establish closer trade ties to accompany closer political links. At the same time, seaborne trade has been threatened by logistics bottlenecks and, more recently, by Houthi attacks in the Red Sea. These two factors combined have led to a push to build better overland transport links across the region.

  The best demonstration of the renewed focus on overland transport links connecting the region came in April 2024, when Oman-Etihad Rail Company awarded contracts for the Hafeet Rail project connecting the UAE with Oman. 

  The estimated AED5.5bn ($1.5bn) design-and-build contract for the civil works was secured by Abu Dhabi-based National Projects Construction, National Infrastructure Construction Company and Tristar Engineering & Construction with Oman’s Galfar Engineering & Contracting. A contract for the rolling stock systems and integration contracts went to German firm Siemens and Egyptian contractor Hassan Allam Construction. 

  The speed at which the Hafeet Rail contracts were awarded was an anomaly, as other major rail projects have taken much longer to be awarded and move into construction. This has become a source of frustration for companies that invest considerable time and financial resources in tendering for contracts. 

  One of the longest-running contract negotiations in the region is for the $7bn Saudi Landbridge project that will link the western Red Sea coast of the kingdom to the eastern Gulf coast through Riyadh. 

  Saudi China Landbridge Consortium signed a memorandum of understanding to develop the project in October 2018. After six years of negotiations, there is now an expectation that construction will start in 2025, although there have been false dawns in the past.

  The Mecca Metro project also has a long history. MEED reported in June 2024 that a feasibility study for the $8bn first phase of the scheme had restarted. Contracts for construction work were tendered and close to being awarded
  in 2014. 

  Another rail project that has been slow to progress is Bahrain’s planned metro scheme. Launched in 2021, Bahrain’s Transportation & Telecommunications Ministry prequalified seven groups for the contract to deliver the first phase of the network on a public-private partnership basis in early 2023. Since then, it is understood that the project has shifted back to the study phase as the government considers the best way to proceed with the scheme. 

  Airport projects also take time. The construction contract for the substructure of Al-Maktoum International airport was close to being awarded in early 2020 before the Covid-19 pandemic. That tender then ceased to be a priority as the focus for Dubai’s aviation sector shifted to supporting airlines Emirates and Flydubai and airport operations during the lockdown period, enabling the sector to reopen more quickly than its competition. 

  Now, expanding Dubai’s airport capacity is once again a strategic priority. Dubai International’s constrained site means it cannot add to its two existing runways, which means it is becoming vulnerable to being overtaken by other emerging hubs in the region.

  At the tail end of the construction process, the completion of large-scale transportation projects is often delayed. The largest ongoing transport scheme in the region by value is Riyadh’s $23bn six-line metro network, for which construction contracts were awarded in 2013. It was rumoured in late 2024 that it would open by the end of the year, although no opening date has been confirmed. 

  There are examples of rail projects being completed more quickly. The Doha Metro network was opened as planned before Qatar hosted football’s Fifa World Cup 2022. The second and third phases of the UAE’s Etihad Rail network were also completed promptly, which has allowed Etihad Rail to focus on other schemes such as the passenger rail service, the Hafeet Rail project and the proposed high-speed rail scheme. 

  Like railways, there are examples of delayed airport schemes that ran over budget. The Midfield Terminal Complex at Abu Dhabi International airport was delayed for years, as was the opening of the first phase of Hamad International airport in Qatar and Muscat International airport in Oman. 

  Although delays were a significant problem for the construction companies involved in the projects, it is worth
  noting that once the projects were completed, they were broadly praised for their quality and step-change in passenger experience.

   

  Future focus

  Looking ahead to 2025, the region’s strategic location and competitive edge in aviation will remain, which will support the business case for airport projects. The more interesting challenge will be the region’s ability to fund projects as large as King Salman International airport and Al-Maktoum International airport. 

  In Saudi Arabia, project spending is being more closely managed than it was in the past, and although people close to the King Salman International airport scheme insist that it remains a strategic priority, the same can be said of many other major projects in the kingdom. 

  There are also funding questions to be answered for Al-Maktoum International airport. Dubai does not have the financial resources to match Saudi Arabia, and with other infrastructure spending commitments – such as the $5bn Blue Line extension to Dubai Metro and an $8bn stormwater drainage scheme – funding the $35bn airport project will be a challenging undertaking. 

  High-level concerns are also present for transport links within the region. The warm relations that countries within the region enjoy today may change in the future, and should that happen, the impetus to complete regional rail links will quickly subside. 

  On the operational level, securing contractors and resources from the supply chain will be an ongoing problem. The record levels of construction awards in recent years mean that construction companies can afford to be selective about the projects they work on, and when they do choose to bid, they no longer feel obliged to slash their prices.

  According to regional projects tracker MEED Projects, there were $37.8bn of transport contract awards in 2023, up from the $36.8bn of awards recorded in 2022. 

  By the end of October 2024, there had been $30.8bn of transport project contract awards. If extrapolated, this suggests a $37bn total for 2024, which is only slightly below the 2023 annual total. 

  The ability of contractors to hold firm when bidding was evidenced in October 2024, when initial offers were submitted for Dubai Metro’s Blue Line extension. The lowest bids were about $1bn over the project’s official $5bn budget, and a subsequent round of revised prices did not reduce that gap significantly. 

  Dubai Metro is just one of several major rail schemes due to be awarded soon. As well as the Saudi Landbridge, contractors are also competing for a contract to complete the extension to Riyadh Metro’s Line 2, which is at the bid evaluation stage. A contract to build an entirely new Line 7 was also tendered in September 2024 with a closing date in March 2025. 

  While it is not entirely reliant on these metro projects and the airports in Riyadh and Dubai moving into construction, their progress will go a long way to determining whether 2025 is a good year or not for transport projects in the region. 

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  Colin Foreman
• 
  Omran’s tourism strategies help deliver Oman 2040

  24 December 2024

  

   

  Tourism is a key component of Oman 2040, the overarching vision guiding social and economic development in the sultanate. 

  The sector will play a key role in promoting Omani culture and national identity by showcasing cultural and historical landmarks, while at the same time promoting economic diversification by creating opportunities for work and investment. 

  Oman Tourism Development Company (Omran Group), which was established in 2005 by the government, is playing a leading role in delivering these objectives with a multi-faceted approach that aims to enhance Oman’s tourism offering so that it can deliver on the goals of Oman 2040. 

  Omran’s approach covers the entire value chain of the tourism industry, says Hashil Al-Mahrouqi, CEO of Omran.

  “This covers three key areas. Number one is creating experiences so that people have a reason to come and visit the sultanate. Number two is hospitality, which means that once people come to Oman, they need somewhere to stay, and Omran has a portfolio of hotels and resorts. The third part is development, which is what we do for people who want to stay in the sultanate, so for that we create destinations.”

  Oman’s diverse landscape allows it to be a year-long destination, but only if we emphasise the experiences as part of a year-round calendar and let people know about it

  Delivering experiences

  While the three areas are all interconnected, creating experiences is the most important aspect for Al-Mahrouqi. “That is the focus because it is the gateway for getting people to Oman,” he says. 

  Oman has a long history, wide-ranging geography and varied climates to tap into for tourism experiences.

  “We have assessed 15 different locations within the sultanate to showcase the different experiences we can offer,” says Al-Mahrouqi. “What really matters is connecting the experiences and the country’s unique selling points. Oman’s diverse landscape allows it to be a year-long destination, but only if we emphasise the experiences as part of a year-round calendar and let people know about it.”

  Distinct submarkets

  The variety of Oman’s tourism offering means it already has distinct submarkets with different visitor profiles and durations of stay. When visiting the coast or the mountain destinations, the duration of stay is typically about two days, while visitors to Salalah during the summer monsoon, known as the Khareef, tend to stay longer, with stays of about five days.

  “We know that people love to visit Salalah for the Khareef, and we know that it is a long stay for people from the region and within Oman. During the winter, we have visitors who want to glimpse a bit of the city and then want to go camping. Those visits are normally two days and two days,” says Al-Mahrouqi. 

  By developing new experiences, Omran will enhance these existing offerings. “With our projects, we want to give experiences that will give visitors a reason to stay longer. We want to give more variety so they can spend more time here in Oman,” says Al-Mahrouqi.

  Sustainability commitment

  Experiences are just part of Omran’s project portfolio, and the agency is working on a range of other development and hospitality projects.

  “Anything we do as a development project has to support our overall goals for the tourism sector. It also has to be sustainable, because sustainability is part of our DNA as an organisation.”

  Omran’s commitment to sustainability was underscored in September, when it published its environmental, social and governance (ESG) framework for the group’s operations so they align with Oman Vision 2040 and the United Nations Sustainable Development Goals (UN SDGs).

  For specific projects, Omran has a broad range of development and hospitality schemes across the sultanate.

  “We are working on Sustainable City at Yitti and that is in construction now. Then there is Madinat Al-Irfan, which, with 7 million square metres (sq m), will be a destination with experiences, hospitality and lifestyle, so that it connects all the dots with what we are doing as Omran,” says Al-Mahrouqi. 

  Two other major projects in Muscat are planned. “There is a very important project called the Opera District next to the Royal Opera House. We are working with our neighbours so that the whole area is thoroughly masterplanned to ensure we are doing something different,” says Al-Mahrouqi. “We are also working on the redevelopment of Sultan Qaboos Port.” 

  Outside of the capital, another masterplanned development is planned for Salalah. “It is related to agri-tourism, and covers an area of 5.5 million sq m,” says Al-Mahrouqi. The project will leverage Salalah’s unique climate on the Arabian Peninsula by growing 50,000 coconut trees along with papaya and banana trees.

  We are [bringing] Club Med to the region for the first time as a hotel operator 

  Omran is also working on hospitality projects. One such project is the Four Seasons development project, which will offer a hotel and branded residences, including what will be Muscat’s most expensive penthouse. 

  To the north, on the Musandam Peninsula, Omran is working on a Club Med resort. “We are [bringing] Club Med to the region for the first time as a hotel operator,” says Al-Mahrouqi. 

  Another project Omran is developing is a resort on Oman’s tallest mountain, Jebel Shams, which is also the tallest mountain on the Arabian Peninsula. “That is a wellness resort called the Stars Reserve,” he says. “It has been carefully designed so there is no light pollution to affect the views of the night sky.”

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  Colin Foreman