The UAE witnessed the highest growth in absolute terms for contract awards in the GCC last year, a new report showed on Monday.
According to Kamco Invest’s GCC Projects Market Update January 2024, the total value of projects awarded in the UAE jumped 2.7 times year-on-year during 2023 to reach the highest ever mark at $79.5 billion as compared to $29.7 billion in 2022.
The UAE’s projects market maintained its spot as the second biggest projects market in the GCC during 2023 managing to increase its share of total GCC projects awarded from 27.1 per cent in 2022 to 37.9 per cent in 2023. In context, the UAE recorded $49.8 billion in absolute growth of contract awards from 2022 to 2023, the largest in the GCC during the year. “The Emirates, which hosted the COP28 global climate change conference during the year, witnessed growth in diverse areas of contracts awarded during the year cementing the country’s growing economy as well as its economic diversification push,” the report said.
The UAE showcased its successful focus and track record of diversifying its economy from oil with a significant number of projects awarded in the non-oil sector.
In terms of sectors, the construction sector once again comprised the biggest pie of new project awards in the UAE, representing 44.0 per cent of total projects during 2023, which reached $35.0 billion as compared to $19.1 billion awarded in 2022, thus breaching the $30 billion level for the first time since the 2008 global financial crisis. There has been over $17.5 billion of construction projects awarded across real estate asset classes such as residential, commercial, hospitality and retail sub-sector during the year.
One of the prominent construction projects awarded in the UAE during the year was the $1.2 billion Saadiyat Lagoons project awarded by Aldar Properties. The Saadiyat Lagoons project, which encompasses 6.2 square kilometers, would include the development of 1,102 villas as part of packages of 2 and 4 of the development.
The gas sector followed as the second largest sector in terms of total contracts awarded during the year after it recorded $19.6 billion worth of contracts during 2023 while the water sector fell into a distant third at $5.6 billion in contract awards during the year. Some of the notable contracts in the UAE gas sector during the year was the $1.3 billion project for two key contracts for its sales gas pipeline network across the Emirates during the year awarded by Adnoc Gas.
There have been several sizable and eye-catching projects awarded in the UAE or by UAE multinational companies during 2023 such as the $5.1 billion contract to provide satellite capacity and services for 17 years to the UAE government won by Al-Yah Satellite Communications Company (Yahsat). From its foundation Yahsat has been providing the UAE government services and under this contract the company is expected to provide operations, maintenance, and technology management services.
In the wider GCC region, project awards almost doubled during 2023 to reach USD 209.7 Bn as compared to USD 109.7 Bn during 2022, underlining the progress made by governments in the region. “This was the highest ever aggregate value of in terms of yearly projects awarded in the GCC region,” the report said.
Looking ahead, Kamco expects the 2024 GCC project market to be at par with 2023 levels, given the strong pipeline as well as the reforms being formulated by the governments in the region to move the economy away from the dependence on oil revenues. “The efforts are also evident in the real GDP growth expectations for 2024,” the report noted.