GCC project awards slow down in 1Q as war hits gigaproject momentum

GCC project awards fell 9.7% y-o-y to USD 61.2 bn in 1Q 2026, dragged down by sharp slowdowns in the region’s two largest markets — Saudi Arabia and the UAE — as the US-Iran war rattled investor sentiment and gigaproject momentum continued to slow, according to Meed Projects data cited by Kamco Invest (pdf).

The headline numbers: Saudi awards halved to USD 11 bn — their second-lowest quarterly level in more than five years — while UAE awards dropped 18.5% y-o-y to USD 29.2 bn. The regional decline was partially offset by stronger quarters in Kuwait — where awards were up more than fivefold to USD 8.1 bn — as well as Qatar (+62.1% to USD 8.8 bn) and Oman.

IN CONTEXT- The regional war has dampened foreign investor sentiment and caused disruptions at several major energy and industrial facilities across the Gulf. Foreign investors pulled some USD 120 bn from the UAE earlier in the conflict, and some major firms have paused plans to invest further in projects, including London-based data center firm Pure Data Centers. CEO Gary Wojtaszek told CNBC recently that the firm is pausing data center investment decisions in the region due to the war until “everything settles down,” adding, “no one’s going to run into a burning building, so to speak.”

The Gulf is now also facing a whopping USD 58 bn repair bill for existing energy infrastructure, as well as rising raw material costs, which means a recalibration of project funding is not out of the question.

This comes as some USD 86.7 bn worth of projects remain in the bid evaluation stage, and USD 52 bn are in tendering. That’s out of an estimated USD 550 bn worth of projects in the pipeline, mostly in construction and transport.

Construction + power took the biggest hits

Construction led the downturn, falling 64.4% y-o-y to USD 3.4 bn in Saudi Arabia and 39.9% to USD 7 bn in the UAE. Power awards collapsed 95.8% y-o-y in the UAE to USD 333 mn, and came in at just USD 148 mn in Saudi Arabia. Saudi water awards dropped around 85% y-o-y to USD 729 mn, while gas awards there were just USD 16 mn.

The bright spots: The UAE’s transport sector accounted for more than a third of awards at USD 10.1 bn (more than tripling y-o-y) and gas awards more than doubled to USD 8.5 bn. In Saudi Arabia, chemicals posted the largest absolute increase, rising to USD 2.5 bn during the quarter.

A sluggish year, but sizeable pipeline ahead

“GCC project activity is anticipated to witness sluggish momentum in 2026, weighed down by the destabilizing repercussions of the US-Iran conflict for the region as well as for the global economy,” according to Kamco Invest. Kuwait, Qatar, and Bahrain have declared force majeure on parts of their energy assets, tightening fiscal space and constraining project funding.

Still, the pipeline remains substantial: USD 2 tn-worth of upcoming GCC projects, with Saudi Arabia accounting for nearly 50% (USD 999.3 bn) and the UAE 27.5%. Construction makes up 39.7% of the pipeline, followed by transport (16.3%) and power (15.7%). Saudi Arabia remains MENA’s largest project market under execution at USD 735.1 bn.

A rebound is tentatively expected from 2027, according to Kamco Invest, in line with the projected rebound in economic activity. There are already some positive signs for 2Q 2026, at least: The UAE kicked off the quarter with AED 3.5 bn in contracts for Palm Jebel Ali and a new AED 34 bn Metro Gold Line set to break ground.