Gulf States Accelerate Major Projects Despite Conflict Cost Surge, ADCB Analysis Shows

RIYADH: Saudi Arabia and the United Arab Emirates are on track to push a substantial pipeline of major infrastructure and industrial projects through the second half of 2026, according to analysis from Abu Dhabi Commercial Bank, even as regional conflict continues to drive up shipping, insurance and construction costs.

The report, cited by Asharq Bloomberg, signals that policymakers across the region’s two largest economies have chosen to press forward with key investment plans rather than pause or scale back. Government commitment, ADCB’s analysis suggests, is holding firm against the economic friction generated by ongoing tensions affecting the Gulf.

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Monica Malik, ADCB’s chief economist, assessed second-quarter project data and found investment activity had not buckled. “The data continues to indicate a strong willingness to progress with key development plans,” she wrote.

The geopolitical environment has simultaneously created new strategic imperatives. Regional developments have sharpened the case for diversified export routes and supply-chain alternatives, particularly initiatives designed to reduce dependence on the Strait of Hormuz. Malik expects that shift in priorities to produce visible project announcements as 2026 closes out and into 2027. “Regional developments have reinforced the importance of building greater resilience by diversifying routes for key exports (including hydrocarbons and chemicals),” she said. “We expect projects linked to these initiatives to become more visible toward end-2026 and into 2027.”

In the UAE, major contract awards anticipated in the coming months include deals exceeding $10 billion for expanding Dubai’s Al Maktoum International Airport. Abu Dhabi is also expected to award a $10 billion contract for the second phase of the TA’ZIZ industrial chemicals zone in Al Ruwais Industrial City. Additional oil and gas contracts are set to reach the market as well.

Saudi Arabia’s pipeline tilts heavily toward transportation. The potential award of Riyadh Metro’s Line 7 in the third quarter stands out as the most significant near-term development, valued at approximately $15 billion. Transport-related initiatives are expected to dominate Saudi activity across the second half of the year.

By contrast, the broader Gulf market has shown mixed momentum. Contract awards across the Gulf Cooperation Council fell 26.1 percent in the second quarter compared to the prior three months. That headline figure, though, masks underlying resilience: awards were still 32 percent higher than the same quarter a year earlier and remained broadly aligned with levels recorded in the fourth quarter of 2025. Saudi Arabia recorded a notable increase in awards during the second quarter, tentatively signaling progress in the Kingdom’s next investment phase, according to Malik. The UAE captured the highest absolute value of awards across the Gulf during the first half of 2026.

Project continuity has been supported by strategic stockpiling of raw materials, the development of alternative shipping routes and regional production of essential building materials. These measures have allowed most projects to hold their schedules despite external pressures. Some tenders have still experienced delays as rerouting, shipping, fuel and insurance expenses push construction costs higher.

Whether that cost pressure intensifies or eases as the year progresses will determine how much of the announced pipeline actually reaches the award stage before 2026 closes.