UAE project awards fall 26% in 3Q as construction contracts plunge

The UAE projects market took another hit in 3Q — but it held up better than the rest of the Gulf: Contract awards fell 25.8% y-o-y to USD 15.6 bn, from USD 21.1 bn a year earlier, according to Kamco Invest’s latest GCC Projects Market Update (pdf), citing MEED Projects data. Awards were also down 13.5% q-o-q, but the UAE remained the GCC's second-largest projects market, behind Saudi Arabia.

A bigger slice of a smaller pie: The UAE accounted for 33% of GCC awards during the quarter, up from 27.9% a year earlier. That's because other markets fell faster: every Gulf country recorded double-digit y-o-y declines. Saudi Arabia led with USD 24.4 bn, followed by the UAE's USD 15.6 bn and Qatar's USD 5.2 bn. The UAE briefly overtook Saudi Arabia as the region’s largest projects market in 1Q, before KSA took back the lead in 2Q.

The weakness was pretty broad: Five of the UAE’s eight sectors recorded lower awards y-o-y — but there was one sizable exception.

Gas stole construction’s crown: Gas accounted for nearly 40% of UAE awards at USD 6.2 bn, making it the country's largest projects segment. That included Adnoc's USD 1 bn package for phase one of the Umm Shaif Gas Cap development, part of USD 6.2 bn in contracts awarded by Adnoc and its foreign partners.

Quite the turnaround from 2Q: Gas awards had collapsed to just USD 30 mn from USD 5.3 bn a year earlier, as we reported in July. Adnoc has since reached FID on the full USD 6.2 bn Umm Shaif development, which is expected to begin production by 2030.

Construction went the other way: Awards plunged 67% y-o-y to just under USD 5 bn from USD 15.1 bn, making it the biggest drag on the quarter. We recently covered that UAE contracts are increasingly unwilling to lock in prices for long-term projects, pushing more cost risk from geopolitical instability onto developers and clients. After construction, transport followed at USD 2.1 bn and oil at USD 850 mn.

Zoom out

The UAE held up better than the Gulf as a whole: GCC awards sank 37.2% y-o-y and 19.2% q-o-q to USD 47.4 bn, with Kamco attributing the slowdown mainly to the continuing regional conflict and disruptions to energy exports and trade routes. Despite the ugly quarter, awards for the first nine months remained 2.5% higher y-o-y at USD 204.1 bn thanks to stronger activity earlier in the year.

There's still plenty waiting in the wings: According to MEED Projects, the GCC has a nearly USD 2.1 tn pipeline of upcoming projects. The UAE accounts for 26.4% — roughly USD 543 bn and second only to Saudi Arabia's 49.7%. Construction represents 38.3% of that regional pipeline, followed by transport at 16.8% and power at 15.9%.

One pipeline to watch — data centers: More than 174 major active and planned projects worth over USD 93 bn are being tracked across the GCC. That includes Khazna’s AI data-center development in Ajman, which Kamco puts at around USD 272 mn for construction and deployment.