The total project awards in the GCC witnessed a major decline in Q2 plunging 19.7% to $51.7 billion from the last year's figures of $64.3 billion mainly due to the unprecedented slump of project awards in Qatar coupled with steep fall in UAE contract deals, according to Kamco Invest, a regional non-banking financial powerhouse.
GCC contract awards was evenly distributed during Q2 as three out of the six countries in the GCC registered year-on-year growth in their project awards while the remaining three markets witnessed y-o-y declines during the quarter.
The total project awards in the GCC witnessed a drop during Q2-2024 mainly due to the unprecedented slump of project awards in Qatar coupled with steep fall in awards in the UAE.
In terms of sectoral performance, a y-o-y decline in projects awarded in the construction sector during Q2 was one of the key factors that weighed down the overall contract awards in the UAE. The total project awards in this sector across the emirates recorded 62.9% y-o-y decline to hit $4.4 billion over last year's figure of $11.7 billion.
In context, the construction sector represented 47.1% of the total contracts awarded in Q2 but dropped to 26.6% of the total projects awarded in the UAE during the period.
Moreover, there were no recorded project awards in the chemical sector during Q2-2024 while there was $3.6 billion project awards in Q2-2023.
Overall, the y-o-y growth of sectoral contract awards was skewed to decliners as six out of eight sectors recorded y-o-y declines during the quarter while the remaining two sectors reported growth.
However, despite the fall in the value of contracts awarded during the quarter, the UAE maintained its position as the second largest projects market in the GCC representing 31.6% of the total contracts awarded in the region.
In the UAE gas sector, the total project awards jumped over 6.5 times y-o-y to hit $5.6 billion up from $848 million last year. Similarly, contract awards in the oil sector jumped over 5 times y-o-y to reach $4.3 billion up from $819 million in Q2.
Aggregate GCC project awards declined by 19.7% to $51.7 billion during Q2-204 as compared to $64.3 billion during Q2-2023. GCC contract awards was evenly distributed during Q2-2024 as three out of the six countries in the GCC registered y-o-y growth in their project awards while the remaining three markets witnessed y-o-y declines during the quarter.
On Saudi Arabia, the Kamco Invest report said despite continuing lower oil output, the contracts awarded by the kingdom during Q2 recorded 9.9% increase to reach $30.6 billion as compared to $27.8 billion last year.
One of the main drivers of project activity growth in the Kingdom during the quarter is the acceleration of Neom projects as the Kingdom maintains its focus on delivering the 2030 Vision program on time.
In its latest Regional Economic Outlook, the IMF has revised down real GDP growth of all the six GCC member states citing regional insecurity and continuing oil production cuts. On the back of this economic environment, it is understandable that GCC contracts awarded in the region retreated y-o-y during the quarter.
Total contracts awarded in the UAE declined by 23.6% y-o-y during Q2-2024 to reach $16.3 billion as compared to $21.4 billion during Q2-2023.
On the other hand, aggregate projects awarded in Qatar dropped 98.5% y-o-y for Q2 to reach $162 million compared to $10.5 billion last year. This steep fall of Qatari contracts awarded has dragged down the
aggregate growth of GCC contracts during Q2.
The gas-rich Gulf nation has had one of its best years in 2023 in terms of value of contracts awarded as a result of
the $10 billion LNG project awarded to develop the North Field South.
On Kuwait, the Kamco Invest report said the aggregate projects awarded wait jumped 33% y-o-y to reach $2.3 billion up from $1.7 billion in Q2.
In terms of sectors, Q2 witnessed a jump in the value of projects awarded in the gas, power and transport sectors.
Total GCC gas sector contracts awarded during the quarter jumped 17.3% to reach $14 billion as compared to $12 billion last year. Moreover, the total value of contracts awarded in the GCC power and GCC transport sectors reached $9.8 billion each recording a growth of 9.7% and 27.3% respectively.
On the GCC Projects Market Outlook, Kamco Invest said the total value of projects being planned or in pipeline in the region stands at $3.5 trillion as of July 2.
Saudi Arabia comprised the lion’s share of ongoing or upcoming GCC projects (54% or $1.87 trillion) followed by the UAE which has $856.9 billion and Oman with estimated ongoing or upcoming projects at $245.5 billion, stated the expert, citing MEED Projects data.
However, the picture was different in terms of only upcoming projects in the region excluding ongoing contracts.
The total GCC projects in the pipeline (upcoming projects) reached $1.43 trillion as of July 2. Expectedly, Saudi Arabia also dominated the Mena region’s projects in the pipeline representing 51.6% ($737.2 million) followed by the UAE which comprised 20.4% ($291.4 million).-TradeArabia News Service
