Dubai and Jeddah dominate airport construction in Mena

July 25, 2024, 11:15 AM

The expansion of King Abdulaziz airport in Jeddah aims to raise its capacity to 114 million

19 projects across 11 countries
Total budgets of more than $80bn
2 mega-projects account for $62bn

Just two giant projects, in Dubai and Jeddah, account for almost 80 percent of current spending on airport development in the Middle East and North Africa, a report has revealed.

Some 19 different projects, ranging from expansions to additional runways and entire new airports, are under way in 11 countries across the region, according to CAPA, a Sydney-based provider of aviation market intelligence.

These projects’ budgets total more than $80 billion – and $32 billion of that is being spent on Dubai World Central/Al Maktoum International, the report says. Another $30.7 billion is going on King Abdulaziz Airport in Jeddah.

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In Dubai, capacity is set to rise from 26.5 million passengers a year to 130 million – and ultimately more than 260 million. In Jeddah, the plan is to increase passenger numbers from 40 million to 114 million.

Mena’s focus on the size of individual airports, rather than the number of facilities, comes as global investment in aviation infrastructure struggles to recover from its pandemic-induced decline and the geopolitical volatility that has followed, according to the CAPA report.

It revealed that globally, investment in airport projects has fallen by almost 60 percent since 2018, from $800 billion to $330 billion.

Some large terminal construction projects were awarded at existing Mena airports in 2023, including in Sharjah and Kuwait, the report said.

If the Dubai and Jeddah projects are removed from the reckoning, average airport investment across the Middle East is $1.2 billion.

That was still a large sum, the report said, as “a number of airports attempt to venture outside of being merely an origin and destination facility with some hub traffic, to rival the ‘big three’ airports of Dubai, Doha and Abu Dhabi”.

By comparison, there were 109 infrastructure projects across North America, but the total spend, at $68.4 billion, was lower than the figure for Mena's 19 projects.

Investment in the Middle East and North Africa is typically focused on upgrading infrastructure at existing facilities, according to CAPA.

“That might partly be explained by the proximity of the existing airports in the Gulf region and the very heavy aircraft movements around them – airspace is at a premium and is complicated by military demands," the report said.

It added that "most of the major cities already have a large airport servicing them, and demand for new airports to service, for example, low-cost carriers is low”.

Iran and Iraq, where populations are spread out across more urban areas, are the exceptions. They have six new airports in the pipeline.

However, large-scale development in remote areas of Saudi Arabia might trigger more airport construction there, to serve Neom or other Red Sea destinations.

The Middle East, driven almost entirely by GCC countries, made up just 1.5 percent of the total number of airport expansion projects around the world, but 13.3 percent of total investment, according to CAPA.

North Africa accounts for the ninth and 10th largest airport expansions across Africa, with projects in Egypt and Morocco. It also has the sixth largest new airport, in Tunisia. Investment values are far smaller than for similar developments in the Gulf, in the range of $80 million to $800 million.

The Asia-Pacific region was the bright spot globally, driven by projects in China. The region led in the number and the value of airport developments. The investment at existing Asia-Pacific airports across 170 projects totalled $217 billion. Six of the top 10 projects are in China.

Asia-Pacific also has 90 new airport projects, with a total investment of $121 billion. The top 10 by value are spread across eight different countries.

Hotel trends

Hotel and apartment towers in Dubai. Another 19,000 hotel rooms are under construction in the UAE

Similar trends are visible in the hospitality industry, according to separate research published this week.

Asia-Pacific and the Americas were the only two regions that registered a year-on-year increase in hotel development by the end of the second quarter, said US real estate intelligence company CoStar.

In the Middle East and North Africa, Saudi Arabia and the UAE had the most hotel rooms in the pipeline, at 42,786 and 18,933 respectively.

Growth in these two countries masked otherwise declining activity across the Mena region. Total hotel rooms under construction stood at 225,065 at the end of June, down 4.2 percent on the same period last year.