meed-logo

line1 line2 line3
SIGN IN / REGISTER

Muted public spending hinders global tunnelling

4 April 2025

 

This package also includes: Traffic drives construction underground

The pipeline of tunnel construction projects around the world as tracked by GlobalData stands at $1.3tn, encompassing projects from announcement to execution.

The total pipeline value reflects the overall values of projects that are either entirely tunnels or that have tunnels as an integral part of the work. The project pipeline includes tunnelling works across a range of sectors, including road and railway development, as well as water and sewerage.

The pipeline of tunnel construction projects around the world currently stands at $1.3tn

Subdued spending

Public spending is anticipated to remain muted globally in the short term, as governments are still trying to curtail expenditure to reduce public debt, thereby constraining investments in public infrastructure. This is affecting the demand for tunnel construction, which heavily relies on public infrastructure development. Elevated construction material prices, high interest rates and labour and skill shortages are expected to discourage new investment, further reducing demand for tunnel construction.

These challenges have already impacted project viability, leading to the withdrawal or postponement of funding for 50 projects in Australia’s $78.6bn infrastructure investment programme due to cost increases of over $21bn. The conflicts in Russia and Ukraine, the situation in Gaza and disruptions to shipping in the Red Sea are weighing on new investment levels, particularly in Eastern Europe and the Middle East and North Africa region due to increased uncertainty.

However, this decrease in new tunnel investment is not expected to be uniform globally, as China’s significant infrastructure investment drive, the US’ Infrastructure and Jobs Act and India’s various infrastructure investment programmes are driving new investment in their respective regions.

> Middle East and North Africa (Mena)
The Mena region has a tunnel construction pipeline valued at $128.6bn. The UAE is one of the leading markets, with $25.4bn of projects that are mainly for metro systems and water and sewage tunnels. Across the region, economic factors like high debt and lower oil revenues may hinder the progress of these projects in the future.
> Western Europe

Western Europe has a tunnel construction project pipeline valued at $329.5bn, with Switzerland leading with $60.6bn of projects, follwed by Germany with $56.8bn. Notable projects include the Turin-Lyon tunnel and the Genoa underwater tunnel. Projects in pre-execution and execution stages total $222.8bn, with the highest-value project being Zurich’s $38.8bn CST (underground cargo) Freight Metro Tunnel.

> Northeast Asia

Northeast Asia’s tunnel construction pipeline is valued at $327.7bn, with China contributing $220.3bn, including the $42.4bn Dalian-Yantai undersea railway tunnel. Japan has projects worth $101.3bn, primarily the $65.2bn Tokyo to Nagoya Maglev Railway Line. Most projects are in later development stages, totalling $198.3bn, or 69.8% of the pipeline.

> Australasia

Australasia’s tunnel construction pipeline totals $150.1bn, with Australia holding $112.9bn, about 75% of the region’s value. The largest project is the $87bn Melbourne Suburban Rail Loop, a 90km rail loop with 13 stations. Construction on six stations began in 2022, with the entire project expected to finish by 2050, though rising costs and labour shortages may affect this.

> North America

North America’s tunnel projects are valued at $92.4bn, with $63.6bn in pre-execution and execution stages. The pipeline includes 921.8km of tunnels, primarily in the US. Railway tunnels are the largest segment at $40.7bn, with the Hudson River Rail Tunnel being the highest-value project at $16bn.

> Southeast Asia

Southeast Asia’s tunnel pipeline is valued at $91.3bn, with $55.1bn under construction. Singapore leads with $45.2bn, mainly from rail tunnel projects. The Land Transport Authority awarded a $199m contract for tunnels connecting MRT stations as part of the Cross Island Line’s second phase.

> Eastern Europe

Eastern Europe’s pipeline is valued at $56.3bn, with $46.9bn in pre-execution and execution stages. Major contributors include Turkiye, Czechia and Romania, which has the largest share at $16.3bn. The $9bn Bucharest Metro Line 5 is a key project expected to complete by 2033, with spending projected to rise in the coming years.

> South Asia

South Asia’s tunnel construction pipeline is valued at $47.9bn, with India contributing $31.9bn, primarily from road tunnels. A notable project is the $1.3bn Thane to Borivali underground tunnel. The pipeline includes 2,043.7km of developments, with spending expected to reach $1.8bn in 2024.

> Latin America

Latin America has a growing tunnel construction pipeline valued at $30.3bn, with $28.7bn in later development stages. The region includes 276.2km of projects, with Colombia leading at 92.1km. The highest-value project is the $9.6bn Bogota Metro, which began construction in early 2021.

> Sub-Saharan Africa

Sub-Saharan Africa’s tunnel construction pipeline is valued at $6.7bn, with 63.7% in pre-execution and execution stages. The pipeline includes 1,580km of projects, primarily in Tanzania, Ethiopia and Kenya. Spending may reach $685.4m in 2025, but investment constraints may limit new projects.

In conclusion, while the global tunnel construction industry faces challenges due to muted spending, high construction material prices and geopolitical uncertainties, significant infrastructure investment initiatives in countries like China, the US and India are expected to continue driving new investment.

Traffic drives construction underground 

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/13568541/main.gif
Colin Foreman

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Firms prepare Hudayriat East PPP tunnels advisory bids

    25 June 2026

     

    Abu Dhabi’s Modon Infrastructure, formerly Gridora, has tendered a contract for technical advisory services for the construction of two underwater tunnels connecting the eastern side of Hudayriat Island with mainland Abu Dhabi.

    Consultants have until 26 June to submit their proposals.

    The project includes the construction of a 4.8-kilometre (km) highway, with four lanes in each direction, connecting Hudayriat Island to Mussafah 8th Street.

    The project will be delivered on a public-private partnership (PPP) basis in coordination with the Abu Dhabi Department of Municipalities and Transport and the Abu Dhabi Investment Office.

    The contract term is expected to be 25 years.

    The latest infrastructure development in Abu Dhabi follows Modon Infrastructure’s invitation in May for firms to register for the next phase of Abu Dhabi’s Mid Island Parkway Project (MIPP), which will also be developed on a PPP basis.

    Modon Infrastructure will act as the lead developer, holding the majority equity stake in the project company. It will award the engineering, procurement and construction contract, as well as the operations and maintenance services and advisory appointments.

    The second phase of the MIPP involves the construction of about 11km of highways, including a mix of three-, four- and five-lane sections. The highways will connect the Um-Yifeenah, Al-Jubail, Al-Sammaliyyah and Sas Al-Nakhl islands to Khalifa City and the E10 road.

    The scope also covers the construction of three interchanges: the E20, E10 and Dumbbell interchanges on Al-Sammaliyyah Island.

    The project includes several major structures, such as the E20 interchange, which will feature cast-in-place box-girder and void-slab bridges, and the E10 interchange with cast-in-place box-girder bridges. It also includes I-girder bridges between Raha Beach West and Sas Al-Nakhl Island, as well as a causeway at Sas Al-Nakhl Island.

    Further key elements include a cast-in-place balanced cantilever bridge between Sas Al-Nakhl Island and Al-Sammaliyyah Island; a tunnel between Al-Sammaliyyah Island and Bilrimaid Island; and a cut-and-cover (open) tunnel on Bilrimaid Island. The project will be completed with another tunnel connecting Bilrimaid Island to Um-Yifeenah Island.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17410214/main.jpg
    Yasir Iqbal
  • Algeria tenders upstream oil project contract

    25 June 2026

    Algeria’s state-owned national oil and gas company, Sonatrach, has tendered a contract for the development and rehabilitation of the central processing facility (CPF) at the Bir Berkine oil and gas field.

    The scope of the contract includes the study, supply, construction and commissioning of a project to rehabilitate the CPF facilities at the field, which is located in the Hassi Mesaoud region.

    Sonatrach says in the tender documents that the objective of the project is to ensure the continuity of production activities “under stable and secure operating conditions”.

    It also says the project aims to improve production yields and quality.

    The contract includes both initial and detailed studies as well as the supply of all equipment and materials.

    It also includes the execution of works, the assembly of all equipment and materials, and the commissioning of all relevant facilities.

    The tender has a two-stage submission process, with the first stage requiring technical bids to be submitted by 23 August.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17423013/main3916.jpg
    Wil Crisp
  • Red Sea Global tenders King Salman Bay construction work

    25 June 2026

     

    Saudi gigaproject developer Red Sea Global (RSG) has tendered a contract inviting firms to undertake marine infrastructure works at King Salman Bay on the Red Sea coast, north of Jeddah.

    The scope includes dredging and earthworks, as well as quay wall and edge protection works spanning about 11 kilometres.

    The bid submission deadline is 31 July.

    King Salman Bay is expected to be a waterfront development aimed at reshaping the city’s northern Red Sea frontage into a mixed-use destination, anchored by public-realm improvements and leisure-led development.

    The update follows RSG’s award of an estimated SR100m ($27m) contract to construct a solid waste management centre at its Red Sea Project. The scope includes four buildings: a material recycling facility, a transfer station, an administration building and a vehicle maintenance building.

    In October last year, MEED reported that RSG had secured a SR6.5bn ($1.7bn) credit facility to further develop Amaala, its luxury tourism destination on Saudi Arabia’s northwestern Red Sea coast.

    According to an official statement, “The funding is led by Riyad Bank as the sole underwriter, along with Saudi Investment Bank and Bank Al-Bilad as mandated lead arrangers.

    “The loan arrangement comprises a mix of conventional and Islamic financing and adheres to RSG’s Green Loan Framework, which was first established when it secured private funding from a consortium of four banks for the Red Sea destination in 2021,” the statement added.

    The announcement followed RSG’s opening of its first properties for sale at Amaala, including branded residential communities and a five-bedroom villa on a private island.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17430045/main.jpg
    Yasir Iqbal
  • MECC submits lowest bid on three Kuwaiti oil and gas contracts

    25 June 2026

     

    Kuwait-based Mechanical Engineering & Contracting Company (MECC) has submitted the lowest bid across three separate contracts tendered by the state-owned upstream operator Kuwait Oil Company (KOC).

    The total value of the low bids is $427m, and all of the contracts are focused on developing substations to power industrial lift pumps and remote header manifolds

    Five companies submitted bids for a contract to develop several substations to power industrial lift pumps and remote header manifolds in areas 6, 10 and 12 in southern and eastern Kuwait.

    The bidders were:

    • MECC: KD65,760,000 ($212m)
    • Heavy Engineering Industries & Shipbuilding Company: KD70,630,000 ($228m)
    • Amco Engineering & Construction: KD73,446,100 ($237m)
    • Combined Group Contracting Company: KD76,186,000 ($246m)
    • Nasser Mohammed Al-Badah & Partner General Trading & Contracting: KD79,332,417 ($256m)

    Six companies submitted bids for a contract to develop several substations to power industrial lift pumps and remote header manifolds in areas 8 and 13 in southern and eastern Kuwait.

    The bidders were:

    • MECC: KD30,760,000 ($99m)
    • Badr Al-Mulla & Brothers: KD32,662,040 ($106m)
    • Heavy Engineering Industries & Shipbuilding Company: KD34,139,000 ($110m)
    • Industrial Company for Electrical Projects: KD36,375,520 ($118m)
    • Nasser Mohammed Al-Badah & Partner General Trading & Contracting: KD37,278,526 ($120m)
    • Combined Group Contracting Company: KD37,790,000 ($122m)

    Eight companies submitted bids for a contract focused on developing several substations to power industrial lift pumps and remote header manifolds in areas 7, 9, and 11 in southern and eastern Kuwait.

    The bidders were:

    • MECC: KD35,760,000 ($116m)
    • Badr Al-Mulla & Brothers: KD39,447,165 ($127m)
    • Amco Engineering & Construction: KD39,736,800 ($128m)
    • Heavy Engineering Industries & Shipbuilding Company: KD40,105,000 ($130m)
    • Industrial Company for Electrical Projects: KD43,238,265 ($140m)
    • Engineering Company for Petroleum & Chemical Industries (Enppi): KD43,514,805 ($141m)
    • Combined Group Contracting Company: KD43,650,000 ($141m)
    • Nasser Mohammed Al-Badah & Partner General Trading & Contracting: KD43,706,826 ($141m)

    Kuwait’s oil and gas sector has been in crisis in recent months due to disruption from the regional conflict that started after the US and Israel attacked Iran on 28 February 2026.

    A preliminary peace agreement between the US and Iran, which was announced on 14 June, has increased optimism that disruption to the sector will decrease in the coming weeks.

    Under the terms of the agreement, both sides have stated that the free flow of vessels will be permitted through the Strait of Hormuz, through which nearly all of Kuwait’s crude oil is normally exported.

    READ THE JUNE 2026 MEED BUSINESS REVIEW – click here to view PDF

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17423009/main.jpg
    Wil Crisp
  • Chinese firm wins $265m Saudi hospital contract

    24 June 2026

    Zhejiang Construction International, the local subsidiary of Chinese contractor Zhejiang Construction Investment Group, has won a $265m contract to build the Prince Mohammed Bin Fahd University Speciality Hospital in Al-Khobar.

    Construction is expected to take three years from the start date.

    Prince Mohammed Bin Fahd University awarded the contract.

    Located in Al-Raja district, Al-Khobar, in Saudi Arabia’s Eastern Province, the hospital project will cover about 60,000 square metres.

    The contract covers the construction of a 10-storey hospital building, two five-storey auxiliary buildings connected by corridors and a basement.

    Work will include civil works, mechanical and electrical installation, curtain walling, landscaping, detailed design and the procurement of medical equipment.

    The award is the latest in a series of contracts secured by Chinese contractors from Saudi entities in recent months.

    Last week, MEED reported that Saudi Arabia’s Ministry of Municipalities & Housing awarded contracts worth more than SR1.9bn ($506m) to Chinese contractors for two residential developments in the kingdom.

    China Architectural Construction Corporation won the first contract, valued at SR875m ($233m), to build 2,010 housing units at the Al-Ruba residential project in Riyadh.

    China State Construction Engineering Corporation secured the other contract, valued at more than SR1bn ($266m), for the Al-Rasha Al-Faisaliah residential project in Dammam, comprising 2,426 housing units.

    GlobalData expects Saudi Arabia’s construction industry to record average annual growth of 5.2% in 2025-28, supported by investments in transport, electricity, housing and tourism infrastructure, as well as the $850bn-plus gigaprojects programme.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17412846/main.jpg
    Yasir Iqbal