The Gulf Cooperation Council (GCC) projects market has taken a sharp hit in the first five months of 2025, registering a 39% decline in contract awards compared to the same period last year.

This contraction has been led by a dramatic slowdown in Saudi Arabia’s gigaprojects programme and a broader tightening of spending across the region, which have together reduced the total value of new awarded contracts to $67bn, down from $110bn in 2024.

While the downturn reflects a tempering of the regional construction boom, it would be a mistake to interpret the numbers as an end to activity. Despite the slowdown, there remains a robust pipeline of ongoing and emerging projects across various sectors, including aviation, sport, real estate, public infrastructure and public-private partnerships (PPPs), offering significant opportunities for contractors, consultants and investors.

Even with the recent dip in contract awards, there is no shortage of work in the Middle East construction sector. The UAE has almost matched its 2024 performance and is now leading the GCC in total project spending.

Key clients in Saudi Arabia, such as Diriyah Company and Roshn Group, have continued to award contracts, albeit at a slower pace. This reflects a selective, phased approach to project delivery rather than a wholesale retreat from investment.

Saudi gigaprojects

Since 2017, the focus of Saudi Arabia’s construction market has been the gigaproject programme. These are a series of very large masterplanned projects that are aimed at modernising the Saudi economy as it seeks to diversify away from oil and gas.

There are five official schemes that have officially been given the gigaproject moniker. They are the Neom development in the northwest of the kingdom, which includes the 170km-long The Line; the Red Sea Global tourism focused projects on the west coast; the Diriyah heritage themed development on the outskirts of Riyadh; Qiddiya entertainment city, which includes a Formula 1 racetrack and theme parks to the south west of Riyadh; and the Roshn real estate projects.

The focus has now shifted to event driven projects, as well as schemes located in Riyadh. The focus on Riyadh was underscored in mid-July when the Royal Commission for Riyadh City (RCRC) awarded an estimated $800m-$900m contract to build the next phase of the Riyadh Metro project. The Line 2 extension contract was awarded to the Arriyadh New Mobility Consortium, which includes Italy’s WeBuild.

The Line 2 extension is 8.4 kilometres (km) long, of which 1.3km is elevated and 7.1km is underground. It includes five stations – two elevated and three underground. The extension adds to the existing Riyadh Metro network, which opened in late 2024. Construction work started on the project, which included six lines with 84 stations in 2013.

For events, Saudi Arabia will host five major events over the next decade. The first is football’s AFC Asian Cup in 2027, which will be hosted by venues across the kingdom. Then there is the Asian Winter Games in 2029 at Neom’s Trojena mountain resort. In 2030 there is the World Expo in Riyadh, and in 2034 there is the Fifa 2034 World Cup, which will be hosted by venues across the kingdom, and the Asian Games in 2034, which will be in Riyadh.

These events are a key driver for stadium projects and the development of other associated infrastructure. The kingdom’s World Cup bid includes plans for 11 new stadiums and 134 training sites across the country.

The stadiums include the Mohammed Bin Salman stadium at Qiddiya, for which the construction was awarded to a joint venture of HBK Contracting and Al-Ayuni Investment & Trading in late 2024.

Earlier in 2024, the Saudi Aramco stadium in Damman was awarded to a joint venture of Besix and Albawani, the Jeddah Central stadium project was awarded to China Railway Construction Corporation and Sama Construction for Trading & Contracting, and the Saudi Binladin Group (SBG) was awarded the contract to expand and upgrade Riyadh’s King Fahd Stadium.

Other stadiums are still at the design and tendering stage. The New Murabba stadium, designed by UK-based Arup, is expected to seat 45,000 spectators and host World Cup Round of 32 games. Another major project is the 46,000-capacity National Guard Stadium in southwest Riyadh, with firms currently submitting revised commercial proposals.

Alongside the World Cup, Saudi Arabia is pushing ahead with preparations for Expo 2030. In June, the Public Investment Fund (PIF) established The Expo Riyadh Company as a subsidiary to manage the delivery of the Expo. In July, it awarded Bechtel the project management consultancy contract for the delivery of the Expo 2030 Riyadh masterplan construction works.

The masterplan for Expo 2030 Riyadh encompasses an area of 6 square kilometres, making it one of the largest sites designated for a World Expo event. Situated to the north of the Saudi capital, the site will be located near the future King Salman International airport, providing direct access to various landmarks within the Saudi capital.

The construction works required for the Expo are expected to cost $7bn-10bn to complete and tendering for site offices and initial works has already started.

Morocco’s investment portfolio

Another event focused construction market is Morocco. There has been a surge in construction projects linked to the 2030 World Cup, which it will co-host with Spain and Portugal. The North African country is investing heavily in transport infrastructure, with significant commitments to road, rail and airport upgrades.

Morocco’s $9.5bn investment plan includes the expansion of Mohammed V International Airport and the development of high-speed rail between Kenitra and Marrakech. Stadium construction is also advancing,

In June, A joint venture of local contractors Travaux Generaux de Construction de Casablanca (TGCC) and Societe Generale des Travaux du Maroc (SGTM) was awarded the $320m contract for the next stage of construction works for the Grand Stade Hassan II stadium. It is being built on a 100-hectare site in the El-Mansouria area of Benslimane Province, 38 kilometres north of Casablanca.

Six additional stadiums are undergoing renovation in major cities such as Rabat, Fez and Tangier.

Hospitality and tourism infrastructure are also benefitting. Projects like the St Regis Marrakech Resort and other hotel developments are underway as Morocco positions itself as a destination for 2030 visitors. These works are expected to generate significant construction activity over the coming five years.

Aviation in the GCC

Aviation is another major area of focus for the GCC as it seeks to maintain its position as a global aviation hub. Global airlines with vast networked based in the region include Emirates in Dubai, Qatar Airways in Doha, Etihad Airways in Abu Dhabi, Gulf Air in Bahrain, Saudia in Jeddah, and the soon to be launched Riyadh Air in Riyadh.

Much of the traffic in the region is transit, which means the region needs large efficient hub airports. As passenger numbers continue to increase amid a broad trend of global aviation shifting eastwards, the region needs to continually expand its airport offerings. Over the past decade major airport projects have been completed in Doha, Muscat, Bahrain, Abu Dhabi, Jedaah and Riyadh.

More are planned, and two of the largest aviation projects globally are simultaneously progressing in Riyadh and Dubai. In the Saudi capital, King Salman International Airport is gradually moving forward through a series of tenders, including for terminal construction, runway works, and associated infrastructure. Spanning 57 square kilometres, the airport aims to become the world’s largest in terms of passenger capacity, with a goal of serving 120 million travellers by 2030 and up to 185 million by 2050.

The scale of the project is matched by its complexity. A consortium of international firms is involved, including Bechtel and Parsons from the US, and Foster + Partners from the UK, responsible for masterplanning and delivery roles. Work is progressing on multiple components, such as Terminal 6, the Iconic Terminal, and the fourth runway.

Meanwhile, in Dubai, the Al-Maktoum International Airport (also known as Dubai World Central) is entering a new phase of development. Construction has begun on the second runway, and tenders are out for major packages including terminal substructure and the automated people mover system.

Once complete, the airport will cover 70 square kilometres and is intended to replace Dubai International Airport within a decade, with a targeted capacity of 260 million passengers a year.

Dubai’s real estate market remains a key engine of project activity. Over the past four years there has been a strong surge in property sales and prices. After an initial period when developers focused almost exclusively on villas, attentions are now turning to other real estate asset classes.

Dubai’s luxury demand still strong

In recent months there has been a flurry of high-rise and supertall tower launches in recent months, including Avior by Acube, Deyaar’s Downtown Residences, Meraas’s Jumeirah Residences Emirates Towers, Aldar’s Nebula Tower, and Omniyat’s Lumena.

While none of these towers are planned to eclipse the Burj Khalifa as the world’s tallest, they do underscore both the appetite for luxury developments and the challenges that come with them. Specialist contractors are in demand, and the complexity of building tall introduces risks related to delivery, cost management and market conditions.

Fitch Ratings has warned of a potential correction in residential property prices, which could impact the viability of speculative schemes. Nevertheless, Dubai continues to attract foreign investment and maintain momentum, particularly in prime real estate segments. Developers are betting on sustained demand from high-net-worth individuals and the continued expansion of the city as a global lifestyle and business hub.

One potential challenge to Dubai’s lifestyle offering. Over the past four years the city has been crippled by gridlock during peak hours, and the emirate has embarked on a wide range of projects that seek to address this problem.

The largest project is the Blue Line extension to the Dubai Metro network. The line will have 14 stations, seven of which will be elevated. There will be five underground stations, including one interchange station, and two elevated transfer stations connected to the existing stations. In December last year, the Dubai’s Roads and Transport Authority awarded a $5.5bn contract for all civil works, electromechanical works, rolling stock and rail systems. The winning contractor is a consortium of Limak Holding, Mapa Group and China Railway Rolling Stock Corporation (CRRC).

Another metro line is also planned. In June, consultants submitted bids for design and engineering works for the Gold Line, which will connect old areas in Bur Dubai with the newer housing developments in Dubailand.

Road projects have also been launched. The most recent contract award came in July, when China State Construction Engineering Corporation was awarded the contract to upgrade Umm Suqeim Road from its intersection with Jumeirah Street to Al-Khail Road. As of mid-July, there had been nearly $1.5bn of road construction projects awarded by the RTA over the past year.

What role can the private sector play?

As public finances come under pressure, there is a renewed push for private sector participation in infrastructure through PPP models. Saudi Arabia, the UAE, Iraq, and Jordan are among the countries advancing PPP schemes across sectors.

In Saudi Arabia, PPP awards reached a record $28.2bn in 2023, and while this fell to 18.3 per cent of total project awards in 2024, it still marks a significant shift from earlier years.

Power generation remains a key area of success for PPPs, with an established track record since the 1990s. Initially used for hydrocarbon fired power plants, the model is now used extensively for renewables, which are also backed by power purchase agreements (PPAs) with state off-takers.

The most recent PPAs were signed in July, when a consortium of Acwa Power, Water & Electricity Holding Company (Badeel) and Saudi Aramco Power Company (Sapco) has signed power purchase agreements (PPAs) with Saudi Power Procurement Company (SPPC) for seven renewable energy projects that will require $8.3bn of investment.

The projects, which have a total capacity of 15,000MW, include five large-scale solar photovoltaic plants with a total capacity of 12,000MW and two large-scale wind energy plants with a total capacity of 3,000MW.

Outside of power, schemes include the One-Stop Station programme for roadside facilities and worker accommodation PPPs linked to mining projects.

Abu Dhabi is also prioritising PPP delivery, with the Abu Dhabi Projects & Infrastructure Centre partnering with Plenary Group to identify and develop schemes. The student accommodation project at Khalifa University and the Zayed Schools PPP are notable examples.

Elsewhere, Iraq has launched its first airport PPP, tendering the expansion of Baghdad International Airport, while Jordan is moving ahead with school, road, and light rail schemes as part of its Economic Modernisation Vision.

Although many PPP projects are planned. Their success is not guaranteed. While momentum is building for project outside of the power and water sectors, some planned projects have made either slow or little progress in recent year. One such project is the Bahrain Metro scheme, which was launched in 2021, and bidding consortiums were prequalified in 2023. Since then, there has been little progress on the project as the authorities review other transport solutions for Bahrain.

Is this a paradigm shift?

Despite a subdued start to 2025, the Middle East construction sector remains active, albeit with more measured and strategic project planning. The shift away from blanket capital expenditure toward prioritised delivery, and the increasing role of PPPs, reflects the new market realities for the coming years.

Delivery is now the main priority. With fixed deadlines for event-driven projects like the World Cup and Expo 2030 on the horizon, and with major transport and real estate schemes underway, the region is still home to some of the world’s most ambitious construction projects.

As these projects move into construction, delivering these projects within increasingly tightened cost constraints will be the key determinant of project success over the coming years.