A total potential project pipeline of US$ 172 billion is expected in Gulf Co-operation Council (GCC) countries this year, according to a new report.
Standard Chartered's MENA Focus report said high oil prices were having a direct impact on growth in oil exporting countries in the Middle East, funding renewed investment in infrastructure, particularly in the UAE and Saudi Arabia.
In terms of projects awarded, Saudi Arabia will remain region's busiest market across all key sectors, from infrastructure to power and gas. Standard Chartered estimated that Saudi Arabia's share of the total pipeline would be around US$ 61 billion this year, with US$ 8.4 billion of projects already awarded since the beginning of the year.
Standard Chartered said Saudi government spending on non-oil infrastructure projects was likely to be +7% higher in 2012 than last year. Infrastructure spending under the Saudi government's 2012 budget allocates US$ 9.4 billion for transport, including projects to expand airports, and the construction of 4000 km of roads.
In addition, 742 new schools and 40 new collages are to be constructed in the education sector, which has a budget of US$ 45 billion this year, while 17 new hospitals are planned under the US$ 23.1 billion healthcare budget, in addition to the 130 under construction.
The two largest economies in the UAE - Abu Dhabi and Dubai - are also enjoying strong positive momentum.
There are signs that Abu Dhabi is ready to kick-start many of the projects in its pipeline after years of slow activity. Standard Chartered said a potential US$ 32 billion worth of projects were waiting to be awarded, with almost US$ 11 billion likely to be awarded in the second quarter of the year, followed by US$ 14 billion in the third quarter.
And Dubai, which has faced significant challenges over the past three years following the bursting of the housing-market bubble and years of over-leveraging, is now seeing its housing market stabilising, according to the report.
In Qatar, meanwhile, Standard Chartered said infrastructure projects in the non-oil part of the economy would begin to play a more important role in driving growth in 2012.
It estimated that there are US$ 3.4 billion of infrastructure projects to be awarded in Qatar by the end of the first quarter of this year, and there is a pipeline of around US$ 26 billion worth of projects for the remaining three quarters. The organisation of the FIFA World Cup in 2022 is also providing a catalyst for growth, while Qatar is also bidding for the 2020 Olympics.