Five project megatrends to watch in 2023
4 January 2023
High oil prices, the journey to net zero and Cop28 in the UAE, property markets, Saudi gigaprojects and deepening regional integration will all be key themes in 2023 that will have a strong bearing on some of the region’s largest projects and programmes of construction work.
These are five of the key megatrends to watch in 2023:
| 1. Neom |
Neom will be a focus of attention for the global construction sector in 2023.
Announced by Saudi Crown Prince Mohammed bin Salman in 2017 with a project value of $500bn, the project arguably failed to live up to expectations following its launch as efforts focused on preparing concepts and designs with little onsite construction activity.
That changed dramatically in 2022 as contractors signed major contracts across the project’s key components. One key development was the signing of construction contracts for the $6.5bn Neom green hydrogen project, which involves building a hydrogen-based ammonia production facility powered by renewable energy.
Other large construction contracts were signed for tunnelling works for The Line, which is a 170-kilometre infrastructure corridor with a highspeed rail system and two rows of interconnected 500-metre-tall-mirrored buildings. Crucially these contracts were won by joint ventures comprising some of the world’s leading names in construction, indicating a shift of opinion within the international community towards the project and its opportunities.
There are plenty more contracts to be tendered and awarded in 2023. There is high-level political pressure for progress to be made on the project, and last year the mountain resort of Trojena was selected to host the 2029 Asian Winter Games giving the project a hard deadline.
As onsite activity gathers momentum, Neom will finally deliver on its promise of being the region’s largest project by far.
| 2. Hydrogen |
Some say hydrogen will follow a similar story to the one experienced by solar power over the past decade, while others say it is reminiscent of the early days of liquefied natural gas (LNG).
The Middle East will play a leading role in deploying this relatively new technology following a slew of project announcements in recent years. The value of all announced hydrogen plants in the Middle East and Africa is now estimated to exceed $70bn. This total rises to more than $120bn if other elements, such as air separation units, export facilities and renewable energy complexes, are included.
These projects are already resulting in contract awards for contractors, and as more schemes move into the construction phase, hydrogen will become an increasingly important industry for the region.
| 3. Rail |
Rail is back. After years of stalled projects, momentum has finally returned to the rail sector as regional governments press ahead with rail projects.
The data shows the impact of these efforts. With $10.7bn of contract awards, 2022 was the best year for the region’s rail sector since 2013, according to data from regional projects tracker MEED Projects.
READ MORE: Railway diplomacy
Even more encouraging is that headway is being made on planned projects expected to be tendered and awarded in the coming two years. The progress is across the region, but most noticeable in the GCC, where there has been a top-down drive to get the GCC Rail Project moving again following the Al-Ula declaration in 2021.
In 2022, design work started and progressed on a series of major rail schemes that should move towards tendering for construction contracts by the end of 2023. Once that happens, the region will be well on course to finally surpass its 2013 peak.
| 4. Dubai real estate |
Dubai’s property market was in rude health in 2022 with double-digit gains in values across multiple asset classes, including residential and commercial space. There was also a wide variety of new project launches, ranging from villa communities to tall towers and offshore islands (again).
The Covid-19 pandemic allowed Dubai to position itself as a home for the wealthy. Compared to other global cities such as London, New York, Paris and Hong Kong, property valuations in the emirate remain highly competitive, even after a year of strong growth.
Prices are also still below the 2014 peak, which suggests the market has the potential to go even higher in 2023. Strong sales and rising prices due to limited supply have meant developers are launching new projects to satisfy demand.
As projects become more daring and ambitious, a key question will be whether Dubai’s construction sector still has the appetite for major projects. Over the past five years, international players have left the market and, in 2020, the UAE’s largest general contractor, Arabtec Construction, filed for bankruptcy.
The plight of these companies is a reminder that Dubai’s property market is cyclical, and while there may be good times today, things may not be so good in the future.
READ MORE: Real Estate Returns
| 5. Saudi nuclear |
It takes years to prepare the regulations and designs for nuclear power plants. Saudi Arabia is no different. It has been pursuing its nuclear strategy since 2016. While progress may appear slow, experience from other markets has shown that nuclear power plants become significant undertakings once they move into construction. For example, the contract to build Abu Dhabi's nuclear reactors, signed by a South Korean consortium in late 2009, was valued at $20bn.
In Saudi Arabia, preparatory work is proceeding for its nuclear power programme, which is being pursued with a three-pronged strategy. Most of the nuclear power capacity will be developed through conventional, large-scale nuclear facilities, such as the one being studied by major consultants.
READ MORE: Nuclear power's strategic importance grows
The kingdom also plans to develop atomic energy through a series of smaller, system-integrated modular advanced reactor technology (Smart) nuclear power plants. The third pillar involves mining uranium resources to fuel the plants, as highlighted earlier this year by the kingdom's energy minister.
In March 2022, it was reported that Saudi Arabia had established a holding company to develop nuclear power projects in the country. Also over the past year, the King Abdullah City for Atomic & Renewable Energy (KA-Care) awarded three separate contracts for the legal, technical and financial advisory works for the project.
As these plans progress towards the tender of contracts, contractors are preparing themselves for the construction phase. For example, in late 2021, MEED reported that local contracting company Nesma & Partnerships had signed a memorandum of understanding with France’s Bouygues Travaux Publics to jointly execute civil works for a potential nuclear power plant project in Saudi Arabia.
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
-
Egypt makes steady progress on Assiut refinery2 June 2023
-
Mawani implements $950m of Saudi port projects2 June 2023
-
Dubai unveils new masterplan for Palm Jebel Ali1 June 2023
-
Swedish firm to deliver apartments for Neom1 June 2023
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Contractors submit bids for next phase of Duba port
2 June 2023
Contractors have submitted bids for the next phase of the Duba port expansion at Oxagon industrial city.
The bidders are Belgium’s Deme with Greece’s Archirodon; Van Oord of the Netherlands with South Korea’s Hyundai Engineering & Construction; a Belgian joint venture of Jan de Nul and Besix; Netherlands-based Boskalis with France’s Soletanche Bachy; South Korea’s Daewoo; and China Harbour Engineering Company.
The tender for the project’s second phase follows the award of a contract to deliver the first phase of the port expansion. A team of Boskalis, Besix and the local Modern Building Leaders (MBL) was awarded that estimated SR3bn ($800m) contract in mid-January.
The scope of the Duba port expansion package includes excavation and dredging, revetments for channel widening, demolition, container terminal quay expansion and earthworks, in addition to the development of a flexible quay, a roll-on/roll-off (RoRo) berth and quay walls to a marine services berth and a coast guard facility.
Jacobs is the main design consultant, with Moffatt & Nichol, IGO and Trent as the main sub-consultants.
Contractors are preparing to submit bids in June for a contract to build tunnels connecting the offshore elements of the Oxagon industrial city at Neom to the mainland.
The design-and-build contract involves digging a 6.5-metre-diameter tunnel using a tunnel boring machine (TBM) under the sea that will link the Neom Connector with the offshore elements of Oxagon port. It will house utilities including water pipelines, fibre optic cables and electricity cables.
Crown Prince Mohammed bin Salman launched Oxagon in late 2021. It will include onshore elements as well as floating structures offshore. Construction works on the 48 square-kilometre, eight-sided industrial city have already started.
An expanded Duba port is a critical component of Oxagon and the broader Neom development, as it will allow greater volumes of materials to be imported for the project. With an expected investment value of $500bn, Neom is the largest programme of construction work in the world.
https://image.digitalinsightresearch.in/uploads/NewsArticle/10909320/main.jpeg -
Egypt makes steady progress on Assiut refinery
2 June 2023
Egypt is making steady progress on the $2bn hydrocracking complex package that forms part of the wider Assuit oil refinery upgrade project, according to industry sources.
Assiut Oil Refining Company (ASORC), a subsidiary of state-owned Egyptian General Petroleum Corporation (EGPC), is the project operator.
“Work on the main units is continuing with no significant issues,” said one source.
During 2021, the project faced disruption due to issues related to the Covid-19 pandemic.
In 2023, many projects in Egypt’s oil and gas sector have been disrupted by currency issues due to the declining value of the Egyptian pound.
Most of the projects that the currency issues have significantly impacted have been in their early stages, with the problems related to the procurement of materials and equipment.
France’s Technip Energies is the main contractor performing engineering, procurement and construction (EPC) works on the Assiut hydrocracking complex, as part of a $2bn contract it was awarded by ASORC in February 2020.
In April 2021, Switzerland-based Burckhardt Compression announced being selected by Technip Energies as the gas compressor supplier for the hydrocracker package.
ASORC held a kick-off meeting for the project in September 2020.
Egyptian contractors Enppi and Petrojet are supporting Technip Energies on the project. Enppi has undertaken the engineering work, while Petrojet is carrying out construction work.
In 2021, contractors completed the construction of a $450m high-octane gasoline complex in the Assiut governorate as part of the broader $3.8bn Assuit oil refinery upgrade project.
Assiut refinery
The Assiut hydrocracking complex will be one of Egypt’s major strategic refineries, and will help meet growing local demand for cleaner products.
The project will also become the largest oil refining facility to be implemented in Upper Egypt so far.
Once completed, the project will transform lower-value petroleum by-products, such as mazut, into cleaner, higher-value products.
It is expected to have an output of about 2.8 million tonnes a year of Euro-5 diesel, in addition to other petroleum products.
https://image.digitalinsightresearch.in/uploads/NewsArticle/10908534/main3340.jpg -
Mawani implements $950m of Saudi port projects
2 June 2023
Saudi Ports Authority (Mawani) is implementing a series of projects over the coming 18 months as part of its efforts to improve and expand infrastructure at ports and increase their utilisation rates.
The programme, worth about SR3.5bn ($950m), comprises just over 150 projects, of which 48 are strategic in nature, 90 infrastructure-focused and 14 targeting security enhancements.
The most significant projects are:
At Jeddah Islamic Port
- A four-year contract to build a new road, interchanges and flyovers to link Gate 9 with the Al-Khumrah integrated logistics park.
- Deepening over three years of the north basin approach channel to 14 metres and the construction of a bull nose dike
At Ras al-Khair Port
- Increasing the draft depth of berths 11 and 12 to 16 metres
- A three-year job to widen and dredge the approach channel from 300 metres to 500 metres and deepen it by 3 metres to 19 metres
Other key investments include installing integrated security systems at Jeddah Islamic Port and King Abdulaziz Port in Dammam and constructing a new 40MVA substation at King Fahd Port in Yanbu.
The contracts are expected to be tendered and awarded by the end of 2024.
Mawani’s planned investment comes on the back of several major contracts awarded over the past 12 months, including an agreement with DP World to set up the Al-Khumrah logistics park, the reconstruction and expansion of the first and second container terminals at King Abdulaziz Port, and the upgrade of berth infrastructure and draft depths at Jeddah Islamic Port and King Fahd Port.
https://image.digitalinsightresearch.in/uploads/NewsArticle/10909176/main.jpg -
Dubai unveils new masterplan for Palm Jebel Ali
1 June 2023
Dubai has released details of the new masterplan for Palm Jebel Ali, an artificial island located south of Jebel Ali Freezone.
Double the size of Palm Jumeirah, Palm Jebel Ali will have 110 kilometres of shoreline and extensive green spaces. The development will feature over 80 hotels and resorts, along with a diverse range of entertainment and leisure facilities.
Strategic masterplan
The unveiling of the masterplan aligns with Dubai's commitment to doubling the size of its economy by 2033, as outlined in the Dubai Economic Agenda.
The project, approved by Sheikh Mohammed bin Rashid al-Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, includes seven connected islands, catering to approximately 35,000 families. The development also emphasises sustainability, with 30 per cent of public facilities powered by renewable energy.
MEED reported in January that local developer Nakheel had approached contractors to complete the reclamation works for Palm Jebel Ali.
As with Palm Jumeirah, it is estimated that it could take around 20 years for Palm Jebel Ali to reach its full development potential. Nakheel has previously secured AED17bn ($4.6bn) in funding to expedite the development of various projects, including the Dubai Islands and other waterfront schemes.
The upcoming dredging contract for Palm Jebel Ali is anticipated to involve 5-6 million cubic metres of material, contributing to the completion of the man-made offshore island.
While reclamation work for Palm Jebel Ali is mostly finished, the project was put on hold in 2009. Nakheel had made some progress with infrastructure development, including the construction of bridges on the island by Samsung C+T.
https://image.digitalinsightresearch.in/uploads/NewsArticle/10906519/main.jpg -
Swedish firm to deliver apartments for Neom
1 June 2023
Swedish modular home manufacturer SIBS has been awarded a contract to deliver 2,174 apartments for Neom.
The engineered equipment supply contract involves SIBS constructing 35 buildings within Neom’s primary staff accommodation and office cluster.
The apartments will cater to professionals involved in the planning, engineering and construction of Neom. The entire project is expected to be delivered and commissioned by the third quarter of 2024.
The $500bn Neom development in northwestern Saudi Arabia is the region’s largest construction project and employs thousands of staff.
Elements of the project that have been officially launched so far are The Line, Oxagon, Trojena and Sindalah. There are also plans for an international airport and a coastal strip of hotels known as the Gulf of Aqaba.
https://image.digitalinsightresearch.in/uploads/NewsArticle/10905700/main.gif