Total projects awarded in Kuwait during 2022 reached $2.8 billion

Total projects awarded in Kuwait during 2022 reached $2.8 billion

GCC project awards contracted during 2022 as global economic challenges mounted. The decline of GCC contract awards was affected by high inflation and continuing supply chain problems mainly due to China’s intermittent COVID-19 restrictions which are now lifted. In addition, the increase in benchmark rates by global and regional central banks to combat runaway inflation also impacted project funding in the GCC. The decline in 2022 also reflected limited big-ticket projects outside the Saudi project market. The total value of GCC contracts awarded declined by 18.7 per cent y-o-y during 2022 to $93.6 billion as compared to $115.2 billion in awards during 2021.

This was the lowest project award since 2005, barring the pandemic-induced decline in 2020. All GCC countries, barring Saudi Arabia, witnessed a y-o-y decline in their aggregate 2022 value of projects awarded. In addition, the total value of project awards was above the $100 billion mark every year for the last decade except for the pandemic year (2020) and 2022. Saudi Arabia remained the largest projects market in the GCC during 2022 recording a total of $54.2 billion worth of contracts awarded as compared to $53.9 billion in 2021.

The UAE ranked second recording total contract awards of $19.2 billion vs $25.9 billion in 2021. Saudi Arabia, UAE and Qatar accounted for a combined 93.6 per cent of the total value of contracts awarded in the GCC during the year. Total projects awarded in Kuwait during 2022 reached $2.8 billion against $5.2 billion in 2021. Similarly, Oman witnessed a new project awards drop of 27.1 per cent y-o-y to reach $2.2 billion while the aggregate value of contracts awarded in Bahrain reached $996 million in 2022 as compared to $2.7 billion in 2021. In terms of sector classification, the construction sector witnessed the biggest increase in the value of projects awarded during the year recording a $3.2 billion y-o-y increase in new contract awards to reach a total of $34.3 billion during 2022.

Total projects awarded in Kuwait during 2022 reached $2.8 billion vs $5.2 billion in 2021. The aggregate value of contracts awarded reached its highest in eleven quarters during Q4-2022 at $1.3 billion registering an increase of 687.7 per cent q-o-q as compared to a y-o-y dip of 13.9 per cent. The aggregate Q3-2022 value of contracts awarded in Kuwait reached its lowest in over 19 quarters at $162 million contributing to the yearly overall fall of the value of contracts awarded in the country.

In terms of sectors, Kuwait’s transport sector received the majority of the value of contracts awarded in the country during the year at $1.1 billion up from $299 million in 2021. Comparatively, aggregate projects awarded in the construction sector, the largest sector by the value of contracts awarded in the previous year, fell 67.3 per cent to reach $839 million down from $2.6 billion in 2021. The decline in projects awarded for the construction sector was accompanied by a similar decrease in the aggregate value of projects awarded in the oil sector which declined by 63.4 per cent y-o-y to reach $372 million down from $1 billion in 2021.

On the other hand, according to MEED Projects, there has been a total of $102 million worth of water projects in the sector in 2022 as compared to no projects awarded in the sector in Kuwait during 2021. GCC Project Pipeline Growth is expected to be strong in the GCC projects market during 2023. According to MEED Projects, Saudi Arabia, and UAE, the two biggest contract markets in the region, could witness a growth of up to 20 per cent each in 2023.

Moreover, MEED expects Kuwait, Oman, and Bahrain to witness sharper increases than KSA and UAE. On the other hand, Qatar is the only country which is expected to see a dip in contract awards during 2023 as the country re-evaluates its project awards after the World Cup. In terms of the GCC projects market pipeline, according to MEED Projects estimates, Saudi Arabia has the most dominant projects market with more than $1.2 trillion worth of known, planned and un-awarded contracts in the pipeline.

UAE and Oman follow as the second and third countries with the biggest projects pipeline in the region at $473.8 billion and $169.8 billion of known, planned and un-awarded projects, respectively. Comparatively, Kuwait projects in the pipeline are valued at $156.2 billion according to MEED Projects. In terms of sectors of future projects in the pipeline, around 58 per cent of the GCC’s future projects in the pipeline are in the construction sector with the transport and chemical sectors following a distant second and third representing 12 per cent and 8 per cent respectively.

The growth in the GCC construction sector was mainly driven by the jump in the total value of contract awards in Saudi Arabia’s Construction sector. The Saudi construction sector comprised 59.2 per cent of the total value of projects awarded in the construction sector in the GCC during the year. The outlook for 2023 remains bright for the GCC projects market with more than $110 billion worth of projects already in the tender stage, according to MEED Projects, that would mostly translate into awards. The near-term forecast also remains positive for the region mainly driven by Saudi Arabia’s Construction sector mostly related to the NEOM Giga projects.

-Kuwaittimes