Why Gulf demand for satellites is taking off

Supplied/Iceye

• Gulf satellite spend to hit $75bn
• Finland’s Iceye working with Abu Dhabi
• ‘Earth observation’ a growing field

Man has gone there before, but for the Gulf Arab states the space race is only just picking up.

Led primarily by the UAE and Saudi Arabia, Middle Eastern countries have spent $25 billion on satellites and other space projects and equipment over the past decade. That number is expected to triple to $75 billion by 2032, according to satellite consulting company Euroconsult. 

Many, such as Saudi Arabia, have outlined ambitious space investment plans in their various economic and social strategies such as Vision 2030.

“In the GCC countries, we are definitely seeing a rapid surge, not only in satellites, but also in the whole space industry,” said Fred Liebler, principal at global consultancy group FTI Delta. 

Technological breakthroughs mean it is much cheaper to build and launch satellites these days. For instance, it costs around $1,200 per kg on a SpaceX Falcon 9 rocket for a payload satellite. 

Satellites serve a variety of purposes, such as the capture of high-resolution images of the Earth’s surface in all weather and lighting conditions, which can be used for disaster response, vessel tracking, environmental monitoring, defence and infrastructure analysis.

Gulf demand for these kinds of satellites is growing in both the state and private sectors.

“There has been a rapid demand surge for Earth observation because you can actually have great commercial applications,” Liebler said. 

Earth observation, combined with the use of artificial intelligence, is a prime area of focus for startups and bigger companies alike.

“Even universities now here in the Middle East are developing their own satellites that are being launched,” Liebler said.

Given the growth in the industry, some Arab countries plan to create manufacturing hubs and launch capabilities through partnerships. Oman, for instance, has committed to developing its own space economic zone.

“If you look at the ‘Visions’ from the Gulf countries, the idea is to localise the whole value chain, including the launch of satellites,” Liebler said. 

Supplied/Iceye

One company, Finnish microsatellite manufacturer and operator Iceye, expects to build nearly a hundred satellites in the coming years for customers in the Gulf through a partnership in the region. 

Iceye and Abu Dhabi-based Space42 announced a joint venture in December to manufacture synthetic aperture radar satellites in the UAE.

“We’ve got a programme where we’re building seven [satellites] together and the majority of those are being built in the UAE,” Rafal Modrzewski, CEO and co-founder of Iceye, told AGBI.

He said manufacturing could reach “just over 100” in a few years’ time.

“We see a lot of interest across different partners in the region,” Modrzewski said. “It’s not an interest to buy one or two satellites; it’s an interest to buy 10, 20, 30, sometimes even 50 satellites.”

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The cost of building the satellites has plunged. A few years ago that might have cost more than $200 million, but Iceye can do it for $20 million, Modrzewski said.

Gulf government demand for satellites is primarily driven by security needs and the risks presented by natural disasters.

Iceye, for instance, tracked the heaviest rains on record in the UAE last year, which caused widespread flooding and more than $8.5 billion of physical and economic damage, according to re-insurer Gallagher Re.

“We cover one flood a week now,” he said, adding that the company works with large insurance companies to provide near real-time insights.

Iceye has raised more than $500 million in funding since it was founded in 2014. Its investors include Finnish sovereign wealth fund Solidium Oy, US investment group BlackRock and venture capital firm Seraphim Capital.

Modrzewski said there has been “significant” investment from the Middle East but he declines to give details.