Saudi Arabia, UAE spearhead GCC greenfield projects pipeline
DUBAI, 13 hours, 42 minutes ago
There has been a marginal rise in the number of announced greenfield projects across the GCC in 2024, up 1% to 1,830 from 1,813 the previous year with the growth being spearheaded by regional heavyweights - the Kingdom of Saudi Arabia and UAE, according to Emirates NBD Research.
As the primary destination market for greenfield foreign direct investments (FDI) within the GCC, Saudi Arabia walked away with the lion's share in 2024, accounting for 54% of the total value of projects in the region followed by UAE with 36% share, it stated.
There does, however, appear to have been a decline in the average project value across the GCC, with the total value of projects having fallen by 26% year-on-year in 2024, it stated.
The primary sources of FDI into GCC economies in 2024, on a value basis, included the US (25%), China (17%), the UK (9%) and India (9%). The UAE also made a material contribution to greenfield FDI in the rest of the GCC, accounting for 5% of announced projects in 2024, said the report.
Sectors seeing the highest value of greenfield projects include communications (18%), renewables (14%), metals (8%), electronic components (8%), as well as coal, oil and gas (8%), it stated.
According to the report, the value of greenfield project announcements across Saudi Arabia declined 28% y/y in 2024 to almost $22 billion but remains a strong showing, being the third highest annual value on record.
The kingdom has set an explicit target for FDI in its Vision 2030 plans, hoping to attract $100 billion annually by 2030, with greenfield FDI projects playing an important role in reaching that figure.
Scaling up to achieve the required levels of inflows will be abetted by a series of reforms. These include allowing 100% foreign ownership of companies, a bankruptcy law, and more recently a new law unifying the treatment of foreign and local firms to ensure a level playing field, said the report.
The US, China, the UK and the UAE were the top source countries for Saudi greenfield projects last year. The value of projects stemming from the US saw a sharp rise in 2024, driven by a $5.3 billion investment by Amazon Web Services in data and innovation centres, it added.
On the UAE, the Emirates NBD Research said the value of new greenfield projects plunged 33% y/y to $14.5 billion, representing a normalisation after a particularly strong 2023.
Dubai remained the largest recipient of greenfield FDI in the UAE, accounting for around 58% of the total value of announced projects, followed by Sharjah with almost 12% in 2024, it stated.
Abu Dhabi accounted for just under 11% of the total value of announced projects last year but saw a sharp reduction from the levels seen in both 2022 and 2023, years in which there were substantial investments made in renewables, automotive OEMS and the ICT sector.
Industries that saw the largest value of announced greenfield projects in the UAE in 2024 include real estate, software & IT, renewables, coal, oil and gas, business services, and automotive OEMs, it added.
On the global scenario, Emirates NBD Research said the FDI flows witnessed a drop in 2024 in both value and volume.
As per UNCTAD estimates, the number and value of announced greenfield FDI projects declined by 8% and 7% y/y respectively.
Despite an annual decline in the value of global greenfield project announcements, the level remains high by historical standards, supported by several large-scale projects related to the manufacturing of semiconductors and AI technology, it stated.
Though the pace of growth as been slow, the number of new projects remains well above the pre-Covid average, it added.
The UAE features as the source country for two of the top 10 projects by value of investment, including a real estate investment into Ras El-Hekma in Egypt by ADQ and an investment by Mubadala in semiconductor manufacturing in the US.
While the aggregate value of greenfield projects fell in 2024, there were pronounced differences across geographical regions. Developed economies saw a 15% y/y rise in the value of announced greenfield projects, disproportionately driven by large increases in the value of projects in the US (+93% y/y) and the UK (+32% y/y), said Emirates NBD Research in its report.
In contrast, developing economies saw a 24% y/y decline in the value of announced greenfield projects, it added.-TradeArabia News Service
