Ben Powell, BlackRock's Chief MENA Investment Strategist, indicates a substantial shift in capital flows within the Gulf Cooperation Council (GCC). He projects strategic capital expenditure across the GCC to reach approximately $2.1 trillion by 2030, with estimates ranging from $1.6 trillion to $2.5 trillion. A key takeaway from Powell's analysis is that a growing share of this capital will remain within the region, rather than being recycled into global equities, treasuries, or real estate, signifying a pivot towards domestic investment. This move is largely driven by a renewed emphasis on building economic resilience and self-reliance, with current geopolitical complexities accelerating pre-existing diversification plans away from an over-reliance on oil and gas.
More than 80% of this anticipated capital is directed towards diversifying the GCC economies, focusing on areas beyond upstream oil and gas. Significant investments are planned for energy infrastructure, industry, digital assets, and social initiatives. The two largest categories for capital expenditure include energy, resources, and industry, which is expected to see $735 billion in investment, covering gas, downstream industries, and mining projects. Strategic redundancy, encompassing export routes, ports, and power and water projects, is projected to attract $660 billion. Digital infrastructure, including power grids and cooling for AI, accounts for $323 billion, while selective urban growth tied to events like Expo 2030 Riyadh is allocated $212 billion. Human and environmental resilience, covering healthcare, food, water, and waste systems, will receive $140 billion.
Powell highlights that this increased domestic investment is a response to global chokepoints and a desire for reduced reliance on global trading partners. The necessity for data centers to have robust defense and energy infrastructure further intertwines AI, energy, and national security into a singular investment theme. Financial reforms across the region, such as efforts to securitize residential mortgages in Saudi Arabia (around 23% of total loans in 2024), easing rules on foreign real estate ownership, and deeper capital markets with active IPO pipelines, are reinforcing this shift. Kuwait's return to global bond markets after 2017 underscores a broader reform process, with greater use of debt seen as part of reform rather than a sign of fragility. Powell emphasizes the increasing partnership between government and capital markets to fund societal goals, including traditional infrastructure and new AI-related developments.
Individual GCC markets exhibit varying strategies. The UAE is likely to focus on alternative logistical routing and digital infrastructure, banking, and utilities. Saudi Arabia, with its deep project pipeline, faces significant execution and financing risks, making sovereign-backed projects crucial. Oman's open-ocean access points offer promise, while Qatar, Kuwait, and Bahrain need more selective approaches, with a focus on corridor dependence, debt issuance, and fiscal repair.
