The GCC construction market experienced a significant slowdown in the first five months of 2025, marked by a nearly 40% year-on-year decline in new project awards. According to MEED Projects tracker data, the total value of contracts awarded across the Gulf Cooperation Council (GCC) states between January and May 2025 totaled just $67 billion, down from $110 billion in the same period of 2024.
Causes of the Slowdown
This sharp contraction primarily stems from a pause in mega spending on Saudi Arabia’s giga projects and a general reduction in public and private sector expenditures across the region. Saudi Arabia saw the largest drop, with contract awards falling by $34 billion in value. While nearly all GCC countries recorded a decline, Kuwait was the only exception, maintaining its previous year’s contract level.
Sector Impact
Sector-wise, the biggest declines occurred in construction and oil-related projects, with only power and petrochemical segments showing resilience. This decline follows two years of record spending that fueled major oil and gas developments alongside ambitious giga-project programs totaling over $1 trillion.
Outlook and Prospects
Despite the slowdown, the UAE managed to sustain near-2024 levels of project spending, leading to total regional project activity in 2025. Market analysts expect the remainder of the year to focus on more selective awards driven by economic prudence and recalibrated development priorities. The overall market correction is seen as temporary, with long-term growth prospects supported by ongoing infrastructure needs, particularly in transportation, energy, and smart city projects.
