meed-logo

line1 line2 line3
SIGN IN / REGISTER

Riyadh reins in spending

24 May 2024

 

Register for MEED's guest programme 

On the surface, it feels like business as usual in Saudi Arabia as new projects continue to be launched.

On 8 May, designs for another futuristic project at Neom’s Gulf of Aqaba were released with slick computer-generated imagery. Known as Jaumur (pictured), it includes the development of a mixed-use community featuring 1,200 residential units and two hotels offering 350 rooms. The most eye-catching part of the project is at the marina, which will have a 1.5-kilometre aerofoil that will rise above the yacht berths.

Beneath the surface, a consensus is emerging that the kingdom’s projects market is in the midst of a recalibration as spending is reined in.

The challenge for Riyadh over the next few years will be balancing the delivery of its ambitions with the reality of its financial capabilities.

The first public sign that things were changing came in December 2023, when Finance Minister Mohammed Al Jadaan told reporters at the launch of the 2024 budget that the delivery of some of the projects included in the Saudi Vision 2030 plan may be delayed to avoid pressure on the economy.

Tightening the purse strings

The ministry-level decision is trickling down as individual development companies are not getting their full budgets approved. “Our firm is working on almost all of the major projects in Saudi Arabia in some capacity,” says an international consultant. “The feedback we are getting is that budget spending for 2024 has been reduced by about 30% on average.”

Many of these delivery companies are subsidiaries of sovereign wealth vehicle the Public Investment Fund (PIF), which has taken a leading role in transforming the kingdom’s economy over the past eight years with development schemes including its five official gigaprojects, Neom, Roshn, Red Sea Global (RSG), Qiddiya and Diriyah.

The reports of budget cuts have coincided with a drop in contract awards. According to MEED’s Gigaprojects Tracker, there has been a sharp decline in the value of contracts awarded by the five official gigaprojects this year. 

In April, they awarded $166m of work, down from $271m in March and $509m in February. The total in January was $5.56bn, largely due to the $4.7bn contract awarded to the local Webuild for the construction of dams at the Trojena mountain resort in Neom.

The reports of budget cuts have coincided with a drop in contract awards

Funding options

The budget cuts are just part of the message, says the consultant. The delivery companies are being told to find external investment to deliver their projects, and there are already signs of this happening. The clearest came in late April, when Neom announced a $2.7bn revolving credit facility from nine local banks to cater to the project’s short-term financing requirements.

In a statement, Neom CEO Nadhmi Nasser highlighted the project’s drive to find new sources of funding. “As Neom continues to gather pace, this new credit facility, backed by Saudi Arabia’s leading financial institutions, is a natural fit within our wider strategy for funding. We continue to explore a variety of funding sources as we deliver transformational infrastructure assets while supporting the wider Vision 2030 programme,” he said. 

In a research note following the deal, London-based Capital Economics said: “While this does take some of the onus away from the government and Public Investment Fund, it is increasingly using resources that could be used more productively in the private non-oil sector.”

Capital Economics also noted that the facility adds to the growing share of commercial banks’ lending to the public sector. Since 2015, this share has increased from 7% to 22% in March 2024.

Another solution for development companies is deploying public-private partnerships (PPPs) to deliver infrastructure and utilities. This is attractive because PPPs reduce the initial capital expenditure required for a project. 

RSG has already pursued this route for The Red Sea Project and Amaala; other development companies are exploring the PPP avenue for their projects.

Real estate investment is another option. There is an expectation that Riyadh will introduce a foreign ownership law that could turbocharge the market as a similar law did for Dubai in the early 2000s. 

There are already examples of real estate investment deals being done, including the National Housing Company with Spain’s Urbas Group for housing in Riyadh, RSG with Kingdom Holding Company for hotels, and King Salman with a real estate development fund.

PPP offers budget and efficiency routes

Prioritising projects

As projects in the kingdom are developed differently, the challenge for the construction industry will be identifying which of the many schemes that aim to transform the Saudi economy are a top priority.

Much will depend on the success of the investment drive. The most likely projects to go ahead are those linked to global events with immovable deadlines. Experience across the region over the past decade has shown that even if construction elsewhere slowed down, construction for Expo 2020 in Dubai and the 2022 Fifa World Cup in Qatar continued regardless. 

“For Saudi Arabia, there are three major events: the Asian Winter Games in 2029, Expo 2030 and World Cup 2034. They will be the obvious priorities,” says the international consultant.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11816519/main.gif
Colin Foreman

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

Click here to register
Exclusive from Meed
Related Articles
  • UAE banks ready to weather the storm

    8 April 2026

     

    Amid unprecedented turbulent geopolitics, Emirati lenders are putting on a confident face. More than one month in from the Iran conflict, Dubai’s largest bank, Emirates NBD, raised $2.25bn in long-term financing – obtaining, it said, the tightest pricing in the bank’s history for a syndicated loan, which aims to strengthen the bank’s liquidity position.

    Bankers view this as a token of the sector’s resilience. “Strong oversubscription from international lenders, together with tight pricing, reflects continued market confidence in the UAE’s financial sector,” said Shayne Nelson, Emirates NBD’s CEO.

    UAE banks entered the crisis in a strong position. Capital and liquidity buffers are robust, with an aggregate capital adequacy ratio of 17.1% in Q4 2025 – well ahead of the minimum 10.5% level. The loan-to-deposit ratio stood at 77.7%, another metric indicating its latitude to extend ample credit to the economy.

    Performance levels last year were impressive. Total assets in the UAE banking system rose 17% in year-on-year terms to AED5,340bn ($1.45bn) by end-2025. Asset quality ratios improved, supported by a 16.2% reduction in non-performing loans (NPLs). Large banks revealed strong profits. The largest Emirati lender, First Abu Dhabi Bank, reported a 24% increase in net income to AED21.11bn ($5.7bn), while Abu Dhabi Commercial Bank similarly saw full-year pre-tax profits rise by 21% to AED12.8bn.

    Analysts paint a picture of a broadly healthy banking system, at least pre-conflict. “In 2025, we saw some margin pressure, as competition for liquidity increased. UAE banks’ profitability metrics declined a bit. But banks entered this crisis in the best shape for the last 10 years. Take the NPL ratio; at around 3%, it’s been on a declining trend for the last five years,” says Anton Lopatin, senior director, financial institutions at Fitch Ratings.

    Support package

    The events since 28 February have clearly ruffled the surface calm, although the UAE Central Bank has stepped in to provide additional support, announcing on 19 March a resilience package mainly made up of precautionary support measures focused on liquidity and forbearance. This comes amid reports of a sharp decline in liquidity in the banking system.

    The package allows lenders to access liquidity and to use capital buffers to support the economy. Banks enjoy enhanced access to reserve balances up to 30% of the cash reserve requirement.

    “The central bank has a strong ability to support banks in the UAE, as it has AED1tn ($270bn) in external reserves. It means that it is able to provide support if needed, backed by these reserves,” says Lopatin. 

    According to Lopatin, overnight deposits at the Central Bank have declined slightly since the conflict escalated, but nothing too severe. “Judging by liquidity indicators at the sector level, it’s under pressure, but it’s still healthy,” he says.

    Ongoing risks

    Nonetheless, a protracted conflict would raise asset quality concerns, given the likely impact on companies in sectors such as infrastructure, real estate, tourism and aviation – those most exposed to war-related effects. In the UAE, hospitality, tourism and real estate also have weaker links to the sovereign.

    Disruption to air traffic and tourist inflows is likely to have only a small direct impact on UAE banks, whose lending to the transport (mostly aviation) and tourism sectors is limited. Fitch estimates the two combined accounted for less than 3% of total loans at end-2025.

    “The UAE has always been sensitive to the real estate market performance. It has recovered strongly since Covid, with prices up by 60%. But if there is less economic activity, and less belief in Dubai as a safe jurisdiction, real estate would be among the first sectors to suffer,” says Lopatin.

    Corporate real estate accounted for 13% of gross loans at end-2025, down from 20% at end-2021, and this sector is likely to be the main source of new Stage 3 loans if the conflict is prolonged, warned Fitch in a rating note issued on 2nd April.

    Some banks still have high concentrations in their loan books, namely Sharjah Islamic Bank (29%), Ajman Bank (28%), Commercial Bank International (CBI; 41%), Commercial Bank of Dubai (20%) and United Arab Bank (UAB; 20%). Their asset-quality metrics could weaken, said Fitch, adding profitability pressures, if the real estate price correction exceeds its pre-conflict expectations.

    Already, two Dubai property developers have seen their sukuk (Islamic debt securities) fall into distressed territory, as investor concerns about credit quality and refinancing risks start to register. In mid-March, Fitch Ratings placed Dubai real estate firm Binghatti on a negative rating watch, signalling a potential downgrade.

    Too early to assess

    Yet analysts caution against reading too much into this at this stage. “UAE banks’ total exposure to real estate is not so significant,” he says. “Currently, it’s less than 15%, the lowest level in 10-15 years. Any impact on banks will be gradual, but it will be under pressure, so banks will be under pressure too.  Some smaller UAE banks entered this crisis with less cushioning and higher NPLs and therefore could be affected more.”

    Refinancing risk may also affect the government-related entity (GRE) sector, with these anticipating around $11.5bn in debt maturing this year, according to estimates from Capital Economics, a consultancy.    

    If the refinancing of GRE debt proves too expensive, then UAE banks may have to step into the breach with new credit facilities. 

    “The longer the conflict lasts, refinancing becomes a point of stress,” says Lopatin.

    The capacity of the likes of Emirates NBD to raise finance in the most trying conditions suggests a wider resilience that may stave off worst-case scenarios for UAE banks. The next weeks and months will doubtless be testing for them, and the possibility of cash flow problems yielding a worsened loan quality position is one that will be taken seriously. 

    However, the capital and liquidity buffers painstakingly built up since the Covid pandemic mean banks are ready to weather the storm.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16251184/main.gif
    James Gavin
  • Dubai extends bid deadline for Jebel Ali STP expansion

    8 April 2026

     

    Dubai Municipality has extended the deadline for contractors to submit bids for a contract covering the expansion of the Jebel Ali sewage treatment plant (STP) phases one and two.

    The upgraded facility will be capable of treating an additional sewage flow of 100,000 cubic metres a day (cm/d), with the expansion estimated to cost $300m.

    The scope includes the design, construction and commissioning of infrastructure and systems required to support the increased capacity.

    The new bid submission deadline is 30 April. The original deadline was 2 April.

    Located on a 670-hectare site in Jebel Ali, the original wastewater facility has a treatment capacity of about 675,000 cm/d following the completion of phase two in 2019, combining approximately 300,000 cm/d from phase one and 375,000 cm/d from phase two.

    The main element of the expansion involves modifications to the secondary treatment process at Jebel Ali STP phase two.

    UK-headquartered KPMG and UAE-based Tribe Infrastructure are serving as financial advisers on the project.

    It is understood that the project is part of long-term plans to treat about 1.05 million cm/d once all future phases are completed.

    MEED recently revealed that the municipality is preparing to tender the main construction package for the Warsan STP by the end of the year.

    As MEED understands, the Warsan STP had previously been expected to be procured as a public-private partnership scheme.

    However, the main construction package will now be procured as an engineering, procurement and construction contract.

    The project involves the construction of a sewage treatment plant with a capacity of about 175,000 cm/d, including treatment units, sludge handling systems and associated infrastructure.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16298710/main.jpg
    Mark Dowdall
  • Prequalification begins for King Salman Stadium early works

    8 April 2026

    Saudi Arabia’s Sports Ministry has invited companies to prequalify for a contract covering early works at the King Salman International Stadium in Riyadh.

    The notice was issued on 8 April, with a prequalification deadline of 28 April.

    The stadium will cover about 660,000 square metres (sq m) and have a seating capacity of 92,000. Facilities will include a 150-seat royal suite, 120 hospitality suites, 300 VIP seats and 2,200 dignitary seats.

    The wider development will include sports facilities covering more than 360,000 sq m, including two training fields and fan zones, a closed sports hall, an Olympic-sized swimming pool, an athletics track, and outdoor courts for volleyball, basketball and padel.

    The stadium is set to host the final of the 2034 Fifa World Cup and will serve as the Saudi national football team’s main base.

    US-based architectural firm Populous is the lead architect for the stadium.

    Construction of the stadium is expected to be completed by 2029.

    The stadium will be located next to King Abdulaziz Park.

    Firms submitted prequalification statements for the main design-and-build contract in February.

    Saudi Arabia stadium plans

    In August 2024, MEED reported that Saudi Arabia plans to build 11 new stadiums and refurbish four facilities for the 2034 Fifa World Cup. 

    Eight stadiums will be located in Riyadh, four in Jeddah and one each in Al-Khobar, Abha and Neom.

    A further 10 cities will host training bases: Al-Baha, Jazan, Taif, Medina, Alula, Umluj, Tabuk, Hail, Al-Ahsa and Buraidah.

    There are expected to be 134 training sites across the kingdom, including 61 existing facilities and 73 new venues.

    Saudi Arabia was officially selected to host the 2034 Fifa World Cup during an online convention of Fifa member associations at the Fifa Congress on 11 December 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16298708/main.jpg
    Yasir Iqbal
  • PDO awards Oman gas plant expansion project

    8 April 2026

     

    Petroleum Development Oman (PDO) has awarded the main contract for a major project to expand the Birba gas station in the Dhofar governorate in southern Oman.

    Known as the Budour-Northeast Birba integrated project, PDO intends to execute engineering, procurement, construction (EPC) and commissioning of units to process additional volumes of sour gas.

    Egypt’s Engineering for the Petroleum & Process Industries (Enppi) has won the contract to perform EPC works on the project, according to sources.

    The value of the contract awarded by PDO to Enppi is unknown. The Budour-Northeast Birba integrated project was earlier estimated to be worth about $300m.

    MEED reported last year on the two-way fight between Enppi and India-based Larsen & Toubro Energy Hydrocarbon (L&TEH) for the project’s main EPC contract.

    MEED previously reported that contractors submitted technical bids for the project by the deadline of 30 January 2025. Aside from Enppi and L&TEH, Greece/Lebanon-headquartered Consolidated Contractors Company (CCC) and Abu Dhabi’s NMDC Energy were understood to have submitted technical bids, but are thought to have later withdrawn from the race.

    Enppi and L&THE submitted commercial bids for the project by the 11 June deadline, MEED previously reported.

    After receiving prices, however, PDO appeared to slow down the bid evaluation process for the project’s contract award. The majority state-owned oil and gas producer engaged bidders for discussions and negotiations in the meantime, eventually asking them to extend the validity of their bids until April, one source said.

    The greenfield and brownfield scope of work on the project covers the following:

    • New separator train at the Birba gas station to perform three-stage separation
    • New gas dehydration unit
    • Two new gas injection compressors
    • New gas recovery compressor
    • New gas booster compressor
    • Installation of utility units, such as electrical infrastructure, flare system, drainage, etc
    • New high-pressure flare
    • New instrumentation air package
    • New nitrogen system
    • New drainage vessel
    • Debottlenecking of AP flare header by increasing the flare header size
    • Modification inside existing 33kV gas-insulated switchgear in Birba gas station substation
    • Modification of existing 6.6kV switchboard
    • Interfaces with existing control room
    • Civil and piping interfaces within the Birba gas station facility

    In December, PDO achieved a final investment decision on another major project to build an integrated facility to produce natural gas from the Budour and Tayseer fields in Oman.

    Kuwait‑based Spetco International Petroleum Company (Spetco) won the main design, build, own, operate and maintain (DBOOM) contract for the combined Budour-Tayseer sour gas processing facility project. The value of the contract won by Spetco is $683m.

    PDO awarded Spetco the 15-year contract in September, as MEED reported, with the official signing between the parties taking place in December.

    The project aims to expand the capacity of the existing gas production and processing facility at Tayseer. It represents the second development phase of the gas field. Through the project, PDO is also seeking to appraise, produce and process sweet gas from the Budour field, located about 50 kilometres west of the Tayseer field.

    ALSO READ: 
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16298603/main0506.jpg
    Indrajit Sen
  • Saudi firm to develop $300m Syria Beaumont project

    8 April 2026

    Syria’s Ministry of Tourism has partnered with Riyadh-based firm Ezdihar Holding to develop The Beaumont, described as the country’s first fully integrated residential, commercial and leisure scheme.

    The 77,000-square-metre project is expected to cost $250m-$300m and is positioned as a flagship development aimed at supporting tourism sector recovery, while boosting investment, job creation and skills development.

    Plans include two towers on the Barada River waterfront.

    The first will house a five-star, 150-key hotel with presidential suites, multiple food and beverage outlets, a private members’ club and a spa.

    The second will feature 26 floors of high-end residential units, ranging from one-bedroom serviced apartments to 570-square-metre duplex penthouses overlooking the city.

    Additional components include a two-level retail centre, an outdoor promenade with cafes and restaurants, and a 10-storey business centre targeting regional and international occupiers.

    The project will be delivered through a 50-year joint venture between the Ministry of Tourism and Ezdihar Holding, operating with financial and administrative autonomy.

    Located near Umayyad Square in Damascus, the development is intended to serve as a base for companies seeking regional or national headquarters, alongside a mixed-use destination combining hospitality, retail and leisure offerings.

    Construction will be carried out in phases, with completion targeted within four years.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16298370/main.png
    Yasir Iqbal