Saudi Arabia’s contract awards fell by a steep 49.9% y-o-y in 1Q 2025 to USD 17 bn, reducing its share of total GCC project awards to 32.4%, down from 47.4% in the same period last year, according to Kamco Invest’s GCC Projects Market Update (pdf). The decline, coupled with weaker performance in two other GCC countries, contributed to a 26.8% y-o-y drop in the total value of regional contract awards to USD 52.4 bn, the lowest level in eight quarters.

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Oil dragged us down: The decline was primarily driven by continued challenges in the oil sector, including lower production and pricing pressures, the report said. Saudi Aramco still plans to maintain capital spending, especially in high-value petrochemical projects. Meanwhile, analysts maintain a positive outlook for the non-oil sector in Saudi Arabia for 2025, which should offset oil’s slowdown.

Construction and gas struggle, power picks up the slack: Construction contract awards fell 41.7% y-o-y to USD 5.5 bn in 1Q 2025. Gas didn’t fare much better, logging a 72.6% y-o-y decline to USD 1.9 bn. However, the power sector showed resilience with a 26.7% y-o-y increase in awarded projects to USD 3.1 bn, supported by a USD 90 bn pipeline — setting the stage for a record year — Kamco said.

A busy pipeline: The Kingdom has USD 801.2 bn worth of contracts in pre-execution stages, accounting for 52.1% of the GCC’s total at USD 1.54 tn. The UAE came in second place with USD 312.3 bn, followed by Oman (USD 169.9 bn) and Kuwait (USD 130.8 bn).

The quarter’s major awards: Siemens Energy secured a USD 1.6 bn contract to supply gas turbines for the Rumah 2 and Nairyah 2 power projects, which aim to replace aging oil-fired plants and reduce emissions by up to 60%. Meanwhile, a USD 301 mn contract was awarded to the Saudi arm of Kuwaiti real estate developer Mabanee for Phase Two of the 1.87 mn sqm Avenues Riyadh, a large-scale mixed-use development.

THE REGIONAL PICTURE-

A regional slump in 1Q 2025: Contraction also hit Qatar (down 37.9% y-o-y at USD 5.2 bn), Oman (down 51.1% y-o-y at USD 2.4 bn) and Bahrain (down 42.2% y-o-y at USD 334 mn). The only two countries that posted award increases in 1Q were Kuwait, up 197.6% y-o-y at USD 1.4 bn, and the UAE, up 11.7% y-o-y at USD 26.1 bn.

The first quarter saw declines in six of the eight key GCC industries. The construction sector posted a 50.4% y-o-y drop to USD 12.1 bn, while the oil sector declined 54.6% to USD 5.6 bn.

BUT- The projects market is expected to remain strong through 2025, led by expansions in hospitality and healthcare. Saudi Arabia holds the region’s largest healthcare project pipeline (51%), including the USD 450 mn second phase of King Faisal Medical City in Asir currently up for bidding.

Tariffs and global headwinds: US tariffs are expected to have a limited direct impact due to the region’s low trade exposure. However, indirect effects — such as lower oil prices — could pressure government revenues and, in turn, affect project financing and execution.