The Gulf projects market witnessed a dramatic 40% drop in the value of new contracts awarded between January and May 2025, plunging to just $67 billion from $110 billion during the same period in 2024.
The downturn is largely attributed to a significant deceleration in Saudi Arabia’s spending on mega-projects and a broader regional tightening of expenditures, reports Al-Qabas daily.
According to MEED Projects, a leading regional project tracking firm, all GCC countries — except Kuwait — experienced year-on-year declines in project awards.
Saudi Arabia bore the brunt of the contraction, with a staggering $34 billion drop in contract value. The UAE, however, remained resilient, nearly matching its 2024 figures and emerging as the region’s top spender on new projects.
At the sectoral level, the steepest declines were seen in construction and oil, though all sectors except electricity and petrochemicals recorded decreases in awarded contracts.
The regional market’s decline comes after two years of record-breaking investment in mega-projects, including programs collectively valued at over $1 trillion.
However, the conclusion of many major energy contracts, combined with the re-evaluation and rationalization of ambitious megaprojects, has led to a slowdown in momentum.
MEED warns that the market is now struggling to implement over $600 billion worth of projects that were contracted in the past three years. This is further compounded by weakening oil prices and heightened global economic uncertainty following the imposition of new U.S. tariffs.
Saudi Arabia’s ambitious megaproject agenda has been the most severely impacted. Following a peak in 2023 with $33 billion in contracts awarded, the figure fell to under $25 billion in 2024—and has nearly collapsed in 2025, with just $4 billion awarded in the first five months. If this trend continues, total project awards for 2025 could fall to just a quarter of 2023 levels.
This decline is driven by mounting cost overruns and a lack of sufficient foreign investment. As a result, the Kingdom is reassessing its spending priorities, particularly in light of high-stakes events such as Expo 2030 Riyadh and the 2034 FIFA World Cup, which come with fixed deadlines and immense infrastructure demands.
So far in 2025, only a few major contracts have been awarded by top Saudi megaproject developers—namely Diriyah Holding Company and Roshen Group—highlighting the broader slowdown across the Kingdom’s project landscape.
