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  UAE rail momentum grows as trade routes face strain

  6 April 2026

  

   

  Rail has shifted from a long-term diversification play to an immediate strategic imperative for the UAE. The regional conflict and its ripple effects on risk premiums, insurance costs and schedule reliability have highlighted the vulnerability of traditional logistics routes and maritime chokepoints.

  Against this backdrop, the country’s infrastructure pipeline – particularly rail – now serves as both an economic enabler and a resilience strategy. On the freight side, Abu Dhabi’s Hafeet Rail and the expanding Etihad Rail network are laying the groundwork for higher-capacity, lower-volatility overland transport, reducing reliance on sea-based supply chains.

  Inland connectivity is already being prioritised to counter supply chain disruption, including the recent opening of a green corridor with Oman to accelerate cross-border flows.

  The importance of the programme is equally evident in passenger mobility. Projects such as the Etihad high-speed rail and Dubai Metro’s Blue Line signal a parallel effort to reshape commuting patterns, strengthen labour-market connectivity and support transit-oriented development.

  Network integration

  The next step is to transform these corridors into a fully integrated system. This includes linking rail and road networks with industrial zones, logistics parks and inland terminals, while strengthening redundancy through connections to strategic gateways such as Fujairah Port, which, due to its east coast location, provides an alternative route that reduces exposure to disruption around the Strait of Hormuz.

  Together, freight and passenger rail – combined with planned investments in airports and road network upgrades – are becoming the backbone of the UAE’s next infrastructure cycle. This integrated system not only expands capacity but also strengthens economic resilience, helping to keep trade and urban movement functioning during periods of disruption.

  Pipeline outlook

  According to data from regional projects tracker MEED Projects, the UAE has an infrastructure pipeline valued at about $63bn, covering airports, railways and road schemes.

  In November last year, the UAE’s Minister of Energy and Infrastructure, Suhail Al-Mazrouei, announced a AED170bn ($46bn) package of national transport and road projects to be delivered by 2030.

  Speaking at the UAE Government Annual Meetings in Abu Dhabi on 5 November, Al-Mazrouei said the projects form part of a national strategy to ease congestion and enhance mobility. Initiatives include road expansions, public transport upgrades, and the development of high-speed and light rail systems.

  Key road projects include adding six lanes (three in each direction) to Etihad Road, increasing capacity by 60% to a total of 12 lanes. Emirates Road will be expanded to 10 lanes along its full length, boosting capacity by 65% and reducing travel time by 45%. Sheikh Mohammed Bin Zayed Road will also be widened to 10 lanes, increasing capacity by 45%.

  The plan also includes a study for a fourth federal highway, extending 120 kilometres with 12 lanes and a capacity of up to 360,000 trips a day.

  Work has already begun on the AED750m Emirates Road upgrade, which is expected to be completed within two years.

  Rail progress

  Etihad Rail remains on track to launch passenger services by 2026 and has awarded multibillion-dollar design-and-build contracts for the civil works and station packages of the high-speed rail (HSR) line connecting Abu Dhabi and Dubai.

  Trains on the UAE’s HSR network are designed for speeds of up to 350km/h, with an operating speed of 320km/h. The programme will be delivered in four phases, gradually extending connectivity across the country.

  Procurement is also progressing for the Abu Dhabi Tram Line 4 project. The first phase, announced by Abu Dhabi Transport Company in October last year, will connect Zayed International airport with nearby areas including Yas Island, Al-Raha Beach and Khalifa City. Prequalification has been completed, and the tender is expected to be issued soon.

  In Dubai, the most significant infrastructure project is the first-phase expansion of Al Maktoum International airport. Dubai Aviation Engineering Projects received contractor proposals on 31 March for three superstructure packages. A contractor was selected last year for the substructure works.

  Dubai is also planning to connect Al-Maktoum International airport to the metro network. In March, consultants submitted proposals for the design of the Route 2020 extension, which will link the Expo 2020 station to the airport’s West Terminal.

  Another major project is the Dubai Metro Gold Line. In October last year, Dubai’s Roads & Transport Authority appointed US-based engineering firm Aecom to provide consultancy services for the scheme.

  War casts shadow over UAE construction boom

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  Yasir Iqbal
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  War casts shadow over UAE construction boom

  6 April 2026

  

   

  The UAE’s construction sector entered the year in a position of strength. According to regional projects tracker MEED Projects, contract awards reached $59bn in 2025, a record that surpassed the $53bn awarded in 2024.

  With market conditions expected to remain buoyant, 2026 was forecast to be another strong year. However, the Iran conflict that began on 28 February is set to change that narrative.

  In the short term, the construction sector proved resilient during the first weeks of the conflict. With the exception of a few sites in high-risk zones, construction activity across the UAE has largely continued uninterrupted.

  Cost pressures

  Despite continued activity on the ground, the industry is bracing for cost escalation. Brent crude prices have risen well above the $100-a-barrel mark. For the construction sector, the impact was felt most acutely on 1 April, when the UAE adjusted its domestic fuel prices.

  Diesel surged to AED4.69 a litre, up sharply from AED2.72 in March. This nearly 72% increase has immediate and far-reaching implications for project overheads, affecting heavy machinery operations, site power generation, and the transport of bulk materials such as sand, steel and cement.

  For projects signed under fixed-price contracts during the lower-inflation environment of 2024 and 2025, these increases pose a significant threat to contractor margins and potentially to overall project viability.

  Supply disruption

  These inflationary pressures are compounded by logistical challenges stemming from instability in the Strait of Hormuz. As a critical artery for regional imports, any disruption has ripple effects across the construction supply chain – particularly for long-lead items such as specialised façade systems, high-end finishing materials and key MEP components.

  While the UAE has leveraged overland routes to mitigate some of these bottlenecks, the shift is unlikely to be cost-neutral or time-neutral.

  Insurance gaps

  Legal and contractual frameworks governing projects are now under increased scrutiny. A key concern is the limitation of standard insurance policies. Many contractor all-risk and logistics policies exclude coverage for losses arising from active conflict, creating a significant gap for goods in transit.

  As freight is rerouted to alternative ports and transported over longer distances by road, insurers are becoming increasingly reluctant to provide cover for these extended journeys.

  Contractors are being advised to adopt a more disciplined approach. To recover costs linked to these disruptions, the industry is being urged to move away from the broad claims that have historically characterised regional disputes.

  Employers are unlikely to accept claims that do not clearly distinguish conflict-related impacts from pre-existing project delays. Instead, contractors must precisely document separate heads of claim, including supply chain cost increases, on-site stoppages, and new health and safety requirements.

  Market outlook

  In the longer term, the sector is in a wait-and-see phase. The market’s trajectory will depend heavily on the government’s ability to manage public finances following a period of significant, unforeseen expenditure.

  The cost of defence, combined with reduced tourism revenue, lower oil exports and weaker consumer spending, has created a complex and as yet undetermined fiscal challenge.

  Although construction is likely to be used as a tool for economic stimulus once the conflict subsides, the availability of capital for major new projects remains unknown. Government spending priorities will likely shift towards resilience, including accelerated infrastructure development on the UAE’s east coast.

  Fujairah and the Sharjah enclave of Khor Fakkan – both located outside the Strait of Hormuz – are expected to play an increasingly central role in strategic infrastructure planning. Over the next decade, investment may focus on strengthening the logistics and industrial capacity of these ports to better shield the federation from future geopolitical shocks.

  For the private real estate sector, the outlook depends on whether the attacks that began on 28 February have permanently altered the UAE’s reputation as a secure, low-tax safe haven. While the conflict is testing investor confidence, the country’s operational resilience may still compare favourably with challenges in other global markets.

  If the risks are viewed as manageable, investment could rebound quickly. However, prolonged uncertainty would result in a slower recovery. By early April, warning signs had already emerged, with some developers facing cashflow pressures due to slowing sales.

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  Colin Foreman
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  Firms win $932m Saudi canine training PPP project

  6 April 2026

  

   

  A consortium led by Bahrain-headquartered firm Lamar Holding has been selected for an estimated SR3.5bn ($932m) contract to develop canine training facilities in Jeddah and Dammam, known as the K9 Training Centre and Point of Entry (PoE) project.

  The other members of the consortium are Saudi Arabia’s Safari Holding and US-based firm MSA.

  US-based firm Synergy Consulting is the project’s financial advisor.

  The scheme is being developed through a public-private partnership (PPP) model by Saudi Arabia’s Zakat, Tax & Customs Authority (Zatca), in collaboration with the National Centre for Privatisation & PPP (NCP).

  The firms submitted the bids for the project on 14 July last year, as MEED reported.

  The project will be developed on a design, build, finance, operate, maintain and transfer basis, with a contract duration of 21.5 years, including the construction period.

  The scheme involves the development and operation of the National K9 Training Centre, including new facilities at King Abdullah Port in King Abdullah Economic City, Rabigh governorate, and at King Abdulaziz Port in Dammam.

  The scheme also includes the expansion of existing facilities at Jeddah Islamic Port and facilities maintenance services for all three sites.

  According to the official notice, the contract also covers dog training and other services, such as food, equipment, veterinary care and accommodation.

  The services will be provided at 34 PoEs in the kingdom, 26 of which are currently operational. Eight new facilities are expected to be completed by 2030.

  

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  Yasir Iqbal
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  Acwa solar plants face power output restrictions

  6 April 2026

  Acwa has announced that two of its solar independent power producer (IPP) plants in Saudi Arabia have been subject to temporary power dispatch limitations following instructions from the grid operator.

  According to the developer, the grid operator cited alleged reactive power fluctuations affecting grid stability. Acwa said both project companies deny the allegations.

  The affected assets are the 1,425MW Al-Kahfah solar photovoltaic (PV) IPP and the 2,000MW Ar Rass 2 solar PV IPP.

  Saudi Arabia’s Water & Electricity Holding Company (Badeel) and Acwa, formerly Acwa Power, signed power-purchase agreements with Saudi Power Procurement Company (SPPC) for the development and operation of the plants in 2023.

  Ishaa Energy Renewable Company and Nawwar Renewable Energy Company are the project companies specially set up to manage the Al-Kahfah and Ar Rass 2 projects, respectively. Both were set up as joint ventures between Acwa and Badeel.

  Al-Kahfah received its commercial operation certificate in November 2025. The plant has been under dispatch limitation since 12 December 2025, with partial dispatch permitted since 11 February 2026.

  The accumulated estimated revenue challenged by the principal buyer at Al-Kahfah up to the end of March is approximately SR95m ($25.3m).

  Ar Rass 2 received its initial commercial operation certificate in September 2025. It has been under dispatch limitation since 16 January 2026, with partial dispatch permitted since 8 March 2026.

  The accumulated estimated revenue challenged by the principal buyer at Ar Rass 2 up to the end of March is approximately SR73m ($19.7m).

  Acwa said both project companies have challenged the matter and are conducting detailed technical assessments, including independent third-party analysis. The company said it is also coordinating with the relevant authorities to enable the full restoration of plant operations.

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  Mark Dowdall
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  Kuwait reports attacks on power and water plants

  6 April 2026

  Two power generation and water desalination plants in Kuwait were damaged in a drone attack on 5 April, according to the Ministry of Electricity, Water & Renewable Energy (MEWRE).

  In an official statement, the ministry said the facilities were targeted by “hostile drones as part of the Iranian aggression”,  forcing the shutdown of two electricity generation units due to “significant material damage”.

  No injuries were reported.

  The ministry said technical and emergency teams began work immediately in line with approved contingency plans. 

  It added that coordination was under way with the relevant authorities to ensure the safety and stability of Kuwait’s electricity and water systems, which it said remained a top priority.

  The announcement came amid a broader series of reported attacks on key infrastructure in Kuwait on the same day.

  Kuwait Petroleum Corporation separately said fires broke out at operating units following a drone strike, causing “severe material damage”, although no injuries were reported. 

  MEWRE had previously confirmed that a service building at one of the country’s power generation and water desalination plants was damaged in an attack on the evening of 29 March.

  The incident led to the death of one worker of Indian nationality and caused significant material damage to the building.

  In a separate statement over the weekend, the ministry said it had restored operations at the main transformer station serving the Jahra area after a technical fault caused a temporary power outage.

  Electricity supply was restored to all affected customers following the completion of emergency works, the ministry said.

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

  Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

  Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

  > AGENDA: Gulf economies under fire > GCC CONTRACTOR RANKING: Construction guard undergoes a shift > MARKET FOCUS: Risk accelerates Saudi spending shift > LEGAL: Redefining the region’s arbitration landscape > QATAR LNG: Qatar’s new $8bn investment heats up global LNG race > INTERVIEW: Leyla Abdimomunova, National Development Division, PIF > LEADERSHIP: Shaping the future of passenger rail in the Middle East

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

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  Mark Dowdall