Dubai: The age of the “mega-projects” is not over in the Gulf — in fact, there are nearly $1 trillion worth of investments in such projects as of now.
And they are needed as “part of an audacious bid to transform socially and economically,” according to a new report by Strategy& M.E.
But can these economies keep pushing ahead with such capital-intensive projects, with long gestation periods? Charly Nakhoul, Principal at Strategy& Middle East, has no such doubts.
“The projects are important for the region and were not planned around short- mid- term economical fluctuations,” he said. “Some of these projects are planned to change the face of the economies aligned with the country visions; others are being pursued to respond to immediate needs (e.g., housing).
“Projects are being pursued to diversify the economies away from oil.”
Saudi Arabia pulls out all stops
Much of this is in evidence in the many announcements made by Saudi Arabia to transform itself across sectors. Creating high-profile leisure and entertainment destinations for its domestic and international audience is part of it. No one need look any further than the Neom City destination-in-the-making by the Red Sea shores.
“These projects are being designed to attract all kind of investors local, regional or international,” said Nakhoul. “Testing and discussions are taking place with all of these investors early on to understand needs and requirements (returns, ownership, etc.).
“Obviously, governments will have to take on themselves a few capital expenditure spending (e.g. infrastructure) to incentive investors or prepare the ground.”