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Traffic drives construction underground

3 April 2025

 

On 14 February, Dubai construction was thrust again onto the global stage when Elon Musk, the world’s richest man, announced plans to explore the development of an underground Dubai Loop transportation system, along the lines of the Las Vegas Convention Centre Loop project in the US.

Dubai has typically made headlines globally by constructing the world’s tallest towers. As the city becomes increasingly congested on the surface, it is taking some of its largest construction projects underground.

With Musk’s backing, the Dubai Loop scheme is the most high-profile tunnelling project launched to date. It involves carving a futuristic transport system underneath Dubai. The initial phase of the project is currently being studied by Dubai’s Roads & Transport Authority (RTA) in partnership with The Boring Company, which is owned by Musk. It will cover 17 kilometres (km) and have 11 stations, with the capacity to transport over 20,000 passengers an hour.

The project highlights the importance of expanding underground infrastructure in the Middle East region. This is mostly necessitated by the pressure that rapidly growing cities have put on existing transport and utility networks, particularly in major urban centres such as Dubai, Riyadh and Doha.

Underground opportunities

Projects that involve tunnelling, such as metro rail systems, underground highways and pedestrian walkways, are deemed key enablers in reducing congestion and optimising land use.

The recently completed metro systems in Riyadh and Doha are examples of how underground rail networks can facilitate efficient urban mobility, and more such schemes are planned. 

Without these subterranean projects, cities risk being stuck in a permanent state of gridlock, with longer commute times and decreased productivity. At the same time, tunnelling allows urban planners to integrate sustainable transport solutions, as well as large-scale utilities networks, without disturbing existing cityscapes, thereby enhancing connectivity and economic growth.

These developments signal a major shift in engineering priorities, with regional governments investing in underground transport, sewerage and metro extensions to accommodate their growing populations and infrastructure needs.

While the tower crane-dotted skylines of urban centres in the GCC attract attention, delivering major projects underground is an equally impressive engineering feat. Tunnelling under busy cities requires advanced excavation techniques, careful planning and coordination to avoid disruptions.

More tunnelling work is expected as Dubai takes another significant step forward in tackling its ongoing traffic problems [with] a new metro link

UAE tunnelling projects

Tunnelling work forms a significant portion of the Dubai Metro Blue Line extension. Awarded in December for AED20.5bn ($5.5bn), the project includes 15.5km of underground track and five subterranean stations. When operational in 2029, the Blue Line will significantly expand Dubai’s metro capacity, linking major residential and commercial hubs.

More tunnelling work is expected as Dubai takes another significant step forward in tackling its ongoing traffic problems by starting the procurement process for its next metro link: the Gold Line.

Although the technical details of the project have yet to be revealed, it is expected that tunnels will form a major component of the scheme given that the new line will run through busy urban areas where there is little space to build overground. 

The Gold Line will start at Al-Ghubaiba in Bur Dubai. It will run parallel to – and alleviate pressure on – the existing Red Line, before heading inland to Business Bay, Meydan, Global Village and residential developments in Dubailand.

As a first step, the RTA has sent a request for proposals to companies for the lead consultancy role on the multibillion-dollar project.

The UAE’s Etihad Rail also began a study of the tunnels required for the high-speed railway line connecting Abu Dhabi and Dubai in January. The survey works are ongoing on the Jaddaf and Dusup tunnels that will serve the high-speed rail link. Initial plans for the project include tunnelling works totalling 31km.

Another major tunnelling project in the UAE is the $22bn Dubai Strategic Sewerage Tunnels scheme. The client, Dubai Municipality, is preparing to tender its first packages, which include deep tunnels that will stretch 42km in Jebel Ali and 16km in Warsan.

The project will be delivered under a public-private partnership model, with international consortiums competing for contracts. Once completed, these tunnels will replace the traditional wastewater network, reducing energy consumption and enhancing long-term sustainability.

Saudi schemes

In Saudi Arabia, Riyadh is preparing to expand its metro network with the addition of a Line 7 and an extension to the existing Line 2.

The total length of Line 7 will be about 65km, of which 47km will be underground. The line will have 19 stations, 14 of which will be underground.

The project involves constructing a metro line linking the Qiddiya entertainment city development, King Abdullah International Gardens, King Salman Park, Misk City and Diriyah Gate. 

In March, the Royal Commission for Riyadh City (RCRC) gave consortiums until 15 June to submit their bids for a design-and-build contract for the construction of Line 7.

The planned Line 2 extension is 8.4km long, of which 7.1km is underground, and three out of its five stations will be built underground. The RCRC is expected to award the construction contract this year.

In January, the kingdom also completed the phased roll-out of the Riyadh Metro network. The current network comprises six lines spanning about 176km, of which 74km is constructed underground.

These numbers indicate that over 42% of the overall network is underground, highlighting the growing importance of tunnels in the kingdom’s plans to improve infrastructure in its most densely populated cities.

Tunnelling works are also a key component of the plans to improve the stormwater drainage system in Jeddah, where the municipality is preparing for the construction of the King Abdullah Road-Falasteen Road tunnel.

The three-year scheme involves constructing 5.3km of tunnels with an internal diameter of 7.2 metres using tunnel boring machines (TBMs) and another 3.4km of tunnels with a diameter of 3.5 metres driven by pipe jacking or TBMs.

At the kingdom’s Neom gigaproject, city planners are looking to find solutions to many of the problems faced in existing cities and, as a result, tunnels and large-scale underground utilities corridors are being built at the beginning of the project. For example, the development’s Delta Junction tunnels will serve as a railway junction connecting the Spine infrastructure corridor with the Neom Connector rail link to the Oxagon industrial zone. 

The project involves 26.5km of tunnelling work that will be split into a north and a south lot. The construction works are expected to begin this year as the client is evaluating the revised proposals submitted by firms in November last year.

Kuwait Metro will feature extensive tunnelling … ensuring minimal disruption to existing roads while integrating with future transport networks

Further tunnel projects

Beyond the Gulf, Egypt has a long history of tunnelling projects, as it has had to deal with crippling congestion and urban overcrowding for decades. In the 1980s, work was completed on two major projects that involved tunnelling: the first phase of the Cairo Metro system and the Greater Cairo wastewater project, which involved the construction of sewage tunnels on the east and west banks of the Nile. 

Today, Cairo’s tunnelling projects include the Cairo Metro Line 4 project. Spanning 42km with 39 stations, it involves over 20km of tunnels.

Meanwhile, in Morocco, national railway operator L’Office National des Chemins de Fer (ONCF) is constructing a tunnel project in Rabat.

In February, ONCF announced a 3.3km tunnel to be constructed under the Bou Regreg river at an estimated cost of MD1.4bn ($140m). The tunnel will connect the Sale and Agdal stations in an effort to alleviate traffic.

Similarly, the long-awaited Kuwait Metro will feature extensive tunnelling to navigate the dense urban fabric of Kuwait City, ensuring minimal disruption to existing roads while integrating with future transport networks. 

Qatar’s expansion of Doha Metro, meanwhile, requires additional underground infrastructure to connect developing areas and support the country’s vision for a comprehensive public transport system. 

Mecca Metro, already serving millions of pilgrims, is also set for further expansion, likely involving significant tunnelling to facilitate smoother access to holy sites while overcoming geographic constraints. 

In Oman, the Muscat Metro project is likewise expected to link key districts while preserving the city’s landscape and avoiding disruptions to arterial roads by introducing underground sections. 

All of these projects show that tunnels will play an important role in the region’s future as it strives to create cities with more efficient and environmentally sustainable transit and utilities systems. 

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Yasir Iqbal

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    The GCC projects market has absorbed almost eight months of conflict better than its economies

    Resilient awards

    The UAE leads the regional market for a second consecutive year, with the value of contract awards 6.1% higher than in the same period of 2025. Oman and Kuwait are also running ahead of last year’s pace, despite the IMF’s forecast that Kuwait’s economy will contract by about a sixth.

    Saudi Arabia has awarded $68.8bn of contracts so far this year, 13% less than in the same period of 2025. Given that the kingdom has been the main target of the Houthi campaign, and was already revising its spending priorities before the conflict, the decline is modest.

    The comparison is against a high base. The past three years have seen unprecedented GCC capital expenditure, supported by higher oil prices, residential demand and national vision programmes. More than three quarters has been concentrated in Saudi Arabia and the UAE.

    The gap between economic output and project spending reflects the nature of the projects market. Governments and state-linked entities can sustain capital budgets through a downturn using reserves and borrowing. GDP contraction, by contrast, reflects lost oil and gas exports, tourism and trade.

    The UAE’s performance this year has been driven by the gas and transport sectors, which have recorded the strongest growth. Construction, the country’s largest sector, has declined as the real estate market has cooled.

    Abu Dhabi has been the standout performer. Contract awards in the capital are up 35% on the same period of last year, with growth across the construction, gas, oil and transport sectors.

    Public spending is a central reason for that resilience. Fitch Ratings expects Abu Dhabi’s spending to rise by 19% this year, equivalent to 3.7% of GDP, to support the non-oil economy. Data from the Central Bank of the UAE shows consolidated government capital expenditure rose to AED18.6bn ($5.1bn) in Q1 2026 from
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    Fitch expects UAE infrastructure and government-related entity capital spending to rise significantly in 2026 and 2027, both to strengthen resilience against future conflicts and stimulate the economy. Emirates have already accelerated tendering on several projects.

    Transport remains a priority. Plans include further sections of the national passenger rail network, a high-speed rail link between Dubai and Abu Dhabi, a light rail system in Abu Dhabi and the Dubai Metro Gold Line. The $35bn expansion of Al-Maktoum International airport in Dubai is moving towards delivery with the award of the first major construction packages.

    Economic headwinds

    Both the IMF and Fitch expect a strong rebound once the strait reopens. The IMF forecasts 2027 growth of 7.7% in the UAE, 7.9% in Saudi Arabia, 18.8% in Qatar and 17.1% in Kuwait. Fitch forecasts UAE non-oil growth of 6.1% next year. Paul Gamble, senior director at Fitch, cautioned that prolonged insecurity “will call into question logistical advantages” that underpin the UAE’s growth model.

    Beneath the headline award totals, there are warning signs. Regional contract awards performed well between March and June, but the value of work awarded in recent months has dropped sharply compared with the same months of 2025. According to MEED Projects, the main cause is a fall in the number of tenders being issued, particularly in real estate.

    The timing is significant. The strong period included the April ceasefire, when clients appear to have pressed ahead expecting a short conflict. Tendering slowed as hostilities resumed. In July, Iranian attacks reached Bahrain, Kuwait, Qatar, Jordan and Oman, while Houthi escalation against Saudi Arabia began.

    The pattern suggests conflict fatigue may be setting in, with clients deferring projects amid a war with no clear end date. As tendering is a leading indicator, the impact on awards is likely to become more visible in coming months.

    In Saudi Arabia, monthly performance has been mixed as the market adjusts to revised spending priorities and the regional conflict. Most sectors are up on last year, with the exception of power and water, which has struggled in 2026, possibly as a result of overbuilding in the past three years. The kingdom’s gigaprojects have continued their retreat. Awards peaked at $31.7bn in 2023 and fell to $14.4bn in 2025. The total so far in 2026 is $9.4bn, most of it for work at Qiddiya, Diriyah and Rua Al-Madinah.

    The GCC has more than $3.4tn of known, planned and unawarded projects over the next 10 to 15 years

    Dubai slowdown

    The clearest signal of the conflict’s impact on the projects market comes from Dubai. The emirate’s market performed strongly until May. Since then, activity has been subdued, and contract awards for the year to date are 0.6% lower than in the same period of 2025.

    The main cause is a decline in residential contract awards. Data from Bayut and the Dubai Land Department shows a marked fall in the value of off-plan sales since late February, when the war began. Residential construction awards have fallen in step, with no sign of the time lag that would normally be expected.

    Third-quarter figures from Savills confirm the trend. Residential transactions fell 38% year on year to 34,500, and transaction value dropped 46% to AED70.8bn ($19.3bn) from AED132.2bn. The decline was concentrated in the off-plan segment, where value fell to AED45.7bn in Q3 from AED61.3bn in Q2, while ready-market value rose to AED25.1bn from AED21.3bn.

    Developers have sharply reduced new launches. Savills recorded about 5,000 units launched in Q3, taking the total for the year to date to about 50,000, roughly 64% below the same period of 2025. Fewer launches mean fewer construction contracts, which explains why residential awards have fallen so quickly. More than 525,000 units are scheduled for delivery between 2027 and 2030, which Fitch says could add pressure to a sector accounting for 8% of non-oil GDP if population growth weakens.

    Escaping Hormuz

    The conflict is also generating new project demand. Saudi Arabia is prioritising ports and transport infrastructure on the Red Sea coast, along with new pipelines to the Red Sea and to Oman. The UAE is developing ports and transport links to the east coast and Oman, and additional pipelines to Fujairah. Fitch anticipates new and expanded road, rail, pipeline and port infrastructure in Oman and Saudi Arabia as GCC states seek routes that bypass the strait.

    The IMF’s forecasts underline the value of those routes. It describes Saudi Arabia as “somewhat less affected” than its neighbours because of its more diversified export routes, while Oman is the only GCC state forecast to grow this year. Houthi strikes on Aramco facilities in Yanbu in September show that Red Sea infrastructure is not beyond reach, however. Defence spending is rising in both Saudi Arabia and the UAE, and repair and rehabilitation work will add to the pipeline once hostilities end.

    The long-term fundamentals remain strong: the GCC has more than $3.4tn of known, planned and unawarded projects over the next 10 to 15 years, about half of it in Saudi Arabia. Many of the kingdom’s priorities are tied to fixed dates, with Riyadh hosting the World Expo in 2030 and Saudi Arabia hosting the Fifa World Cup in 2034.

    The capacity to fund this pipeline depends on oil revenues. MEED’s assessment is that crude prices must remain above $70-$80 a barrel for spending levels to be maintained. With exports through Hormuz disrupted, the volume of oil Gulf producers can move to market matters as much as the price.

    The GCC projects market has absorbed almost eight months of conflict better than its economies. The question for the final quarter is whether the slowdown in tendering is a temporary pause or the start of a sustained retreat. If the IMF’s assumption of a March 2027 reopening of the strait holds, clients will be setting their 2027 budgets with a rebound in sight. If it slips, the resilience of contract awards will face a sterner test. 

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    Colin Foreman