For many years, the UAE and Saudi Arabia have been focusing on ways to diversify their wealth away from oil, creating new sources of revenue to boost the Gulf economies.
It’s not an easy task though. While the Gulf countries are oil-rich, workable arable land and water needed for it to flourish are scarce, so creating non-oil revenue from natural resources is an epic challenge.
The Gulf states have needed to think outside the box, and be more creative, using alternative ways to bring in FDI. Megaprojects are one of those ways.
From a global viewpoint, Middle East megaprojects may seem like nothing more than an ostentatious show of extreme wealth. But as the finite supply of oil eventually dries up, can the expense for these billion dollar projects really be justified? What is the reasoning behind such vast and risky undertakings?
Here, we take a deeper look into why megaprojects play such a strategic role in the future of the GCC’s leading countries.
To attract
In order to diversify their economies, the Gulf states need foreign direct investment. The UAE’s free zones, tax benefits and golden visa/residency initiatives offer fantastic opportunities for talent and businesses to relocate to the Emirates. But the UAE needs more to put it on the global stage.
Under the UAE’s ‘Projects of the 50’, its tourism strategy aims to increase tourism’s contribution to the GDP to AED450 billion by 2031. As part of Saudi Arabia’s Vision 2030, the kingdom expects tourism’s contiribution to the GDP to go from 3 percent to 10 percent.
If the Gulf states are to compete with Europe and Asia in attracting international tourists, their megaprojects need to be distinct and unique, while also driving socio-economic growth.
Examples are:
- Downtown Dubai – an underutilised, neglected area of land has been transformed into a global tourist destination and one of the most desirable residential developments in the city. It’s also home to Burj Khalifa, the world’s tallest building, and the DIFC, the leading financial and FinTech hub in the Middle East.
- The Red Sea development – Saudi Arabia’s regenerative tourism destination which combines the very best in luxury leisure, with sustainable technology to preserve and protect the ecosystem.
- Qiddiya in Saudia Arabia – is set to be the largest entertainment city in the world, three times the size of Disney World in Florida. Dedicated to sports and arts, the resort city will feature water and snow parks, state-of-the-art sporting arenas and educational facilities. It’s estimated the sports and entertainment capital will bring in around 14.5 million visitors per year, contributing $4.5 billion to the GDP.
In another bold move to diversify revenue, boost tourism and move away from oil and gas reliance, Saudi Arabia aims to make its mark on the lucrative international sporting scene.
When it comes to helping the national economy, the signing of soccer superstar Cristiano Ronaldo to Al Nassr FC can be considered a megaproject. Earning an estimated $200 million a year, CR7 is officially the world’s highest-paid soccer player.
The signing of the 37-year-old Portuguese superstar is one of many strategic moves to present the Arab states as more open, global and diverse.
Thanks to other major sporting events, such as the Formula One Abu Dhabi Grand Prix and WWE’s first live event in Saudi Arabia in 2023, sports tourism in the Middle East is estimated to increase by 30 percent, bringing around $600 billion in revenue.
And it’s not just tourists that megaprojects will attract, but businesses and entrepreneurs. These exciting, multi-billion projects are enticing capital and talent from all over the world, as well as offering much-needed employment opportunities to the GCC’s predominantly young population.
To connect
To meet the needs of urbanism, tourism and trade, the Gulf needs to put a lot of money into transport and infrastructure. As a strategic partner in China’s Belt and Road Initiative, the UAE has invested heavily in this area.
In line with the UAE’s tourism strategy, Abu Dhabi international airport is undergoing a multi-billion dollar expansion. The new terminal will be the first in the world to use advanced AI technology and biometric capabilities to accommodate up to 45 million passengers per year.
Etihad Rail is the UAE’s newest national rail network, designed to connect the seven emirates of the UAE with its neighbouring GCC nations: Saudi Arabia, Qatar, Kuwait, Bahrain and Oman.
The largest infrastructure project the Middle East has ever seen will stretch 1,000 km over the Emirates, providing a sustainable, safe and ultra-modern transport network for around 36 million passengers and 60 million tonnes of freight annually by 2030.
It’s estimated that Etihad Rail could contribute around $54 billion to the UAE economy in the next 50 years, with around $12 billion coming from tourism, business and investment opportunities arising from greater connectivity.
To protect, provide, and replenish
One area where the Gulf countries can really stand out and enhance their international status, is in the development of sustainable megaprojects. It’s vital therefore, that expense is justified by providing value and purpose beyond a simple boost in profit margins.
The Gulf countries may be oil-rich, but they have another more crucial natural resource in abundance: sunshine. Renewable energy is the key to fighting climate change and securing the future of our planet.
As major exporters of crude oil and petroleum, the UAE and Saudi Arabia know only too well their responsibilities in finding sustainable alternatives to energy supplies derived from fossil fuels.
Some of the UAE’s most ambitious sustainable megaprojects include:
Mohammed bin Rashid Solar Park – one of the world’s largest single-site solar parks currently under construction in Dubai, is set to generate 5,000MW from photovoltaic and CSP technologies by 2030. It’s estimated that the AED50 billion megaproject will save over 6.5 million tonnes of carbon emissions annually.
Hydroelectric Power Plant, Hatta – first of its kind in the GCC, the Dubai Electricity and Water Authority (DEWA) project is due to be completed in 2024. It will have a storage capacity of 1,500MWh and a production capacity of 250 MWh, contributing to Dubai’s Net Zero and Clean Energy strategies 2050.
Emirates One – The $40 billion joint venture between Ag-Tech startup, Crop One and Emirates Flight Catering will be the world’s largest vertical farm. The 330,000-square-foot warehouse-like facility, located in Dubai, is set to produce more than 900,000 kilos of fresh produce annually. The AI-powered, closed-loop water recycling system used to irrigate the vertical farm consumes 95 percent less water than traditional field-grown fruits and vegetables.
But the ambitious collaboration doesn’t intend to stop at the UAE. In line with the UAE’s National Food Security Strategy 2051 and Water Security Strategy 2036 goals, Crop One aims to expand on a global level, eventually transforming food production across the world.
The city of the future
The one megaproject that encapsulates Vision 2030, is Saudi Arabia’s jewel in the crown: NEOM. At 33 times the size of New York, this extraordinary $500 billion high-tech city is situated at the ‘crossroads of the world’ in northwest Saudi Arabia and extends more than 450 km along the Red Sea coast.
The ‘living laboratory’ merges advanced technology with innovation to create a prosperous and sustainable living model powered by 100 percent renewable energy.
At the heart of NEOM’s vision to put ‘people first’ before infrastructure and transportation is ‘The Line’, an unprecedented development that will have no cars, no roads, and no carbon emissions. Running on 100 percent renewable energy and preserving 95 percent of the land for nature, the Line will cover just 34 square kilometres, accommodating 9 million people and creating 380,000 jobs.
NEOM’s contribution to the Kingdom’s GDP is expected to reach $48 billion by 2030. But it’s contribution to the planet could be even more valuable. It’s a blueprint for sustainable cities of the future.
Worth the risk
There’s no doubting these epic projects are risky, but they are vital for the future of the Arab states – attracting not just tourists, but foreign investors, businesses and talent.
Creating entire cities and infrastructure from such remote and unforgiving landscapes is no mean feat. But to ensure a secure future, it’s imperative that the GCC countries transform from vulnerable, single-commodity economies into prosperous and sustainable powerhouses.
Building big can help them achieve this.
Follow us on
