MENAT-UK trade: seizing the infrastructure opportunity

Here, we identify some of the infrastructure investment and trade opportunities for UK corporates emerging from this backdrop, alongside a snapshot of how MENAT corporates can capitalise on the UK’s infrastructure development priorities.

With the unrealised export potential for UK corporates into MENAT estimated at USD17.7 billion², the UK government is keen to deepen its engagement with the region via targeted trade agreements. Negotiations on a UK GCC Free Trade Agreement (FTA) are ongoing, and a deal could deliver targeted growth that could increase bilateral trade by 16%, potentially adding an extra £8.6 billion a year to trade between the UK and GCC countries in the long term.³ While the existing trade agreement with Türkiye provides tariff-free access for 98.8% of UK goods exports by value.⁴

As part of this export potential, the range of infrastructure opportunities within MENAT are significant, with some of the standout projects as follows:

Egypt:

The government is building a New Administrative Capital in the desert 45 kilometres east of Cairo. Construction began in 2016 and is being completed in four phases.⁵ This megaproject, with an estimated total cost of $58 billion, offers potential opportunities to UK companies around infrastructure, information, and communication technology (ICT) and supporting services. Egypt is also keen to consolidate its position as a global transportation and logistics hub and is investing in a range of ambitious projects, including construction of a new port, El Max, connecting Alexandria to Dekheila and a new breakwater.⁶ The country’s PPP pipeline includes wastewater treatment plants, a programme of desalination projects, and an industrial service centre⁷ – projects which play to the UK companies’ strengths in sustainable construction and waste management solutions.

Oman:

The government’s Vision 2040 strategy has prioritised the development of its ICT sector. This has led to a big push for the construction of vital ICT infrastructure, including 5G networks and the expansion of fibre networks, cloud computing and data centres, as well as smart city initiatives.8 Business ties between the two countries are already strong – the UK accounted for half of the FDI in Oman of $59 billion by the end of the third quarter of 2023.⁹

Türkiye:

The country has invested heavily in transport infrastructure and continues with even more ambitious targets. In response to its tourism boom, Türkiye has significantly improved and upgraded its airport infrastructure with the new Istanbul airport opened in 2018 with plans for building more runways and additional terminals by 2027 to boost capacity to 150-200 million passengers.¹⁰ Toll motorways are another area of focus and with 5,000 kilometres in the pipeline, there are substantial PPP opportunities for UK contractors.¹¹

UAE:

Infrastructure is high on the government agenda, with a target of 15-20% FDI into the sector and $8.7billion PPP currently in the pipeline.¹² One flagship project, currently at the long-list stage, is the Dubai Strategic Sewerage Tunnels PPP. The $22bn project, would eclipse the UK's Thames Tideway PPP in terms of value.¹³ Dubai’s real estate market has also proved buoyant, attracting robust investment from major international real estate players such as Brookfield¹⁴, as well as private investors. In the first half of 2024, British nationals purchased the biggest share of the Dubai real estate market.¹⁵

Saudi Arabia:

The Kingdom’s National Investment Strategy aims to significantly enhance the inflow of FDI, aiming to reach 5.7% of GDP and position the country among the top ten economies in the Global Competitiveness Index by 2030.¹⁶ Vision 2030, Saudi Arabia’s strategic framework for diversification, has opened doors for UK corporates looking to expand into Saudi Arabia. Expertise in construction and urban development projects is at a premium, particularly for the state-backed giga projects, such as the 50-resort Red Sea Global tourism destination. Riyadh is also a construction hotspot, with the city’s population set to grow to 9.6 million by 2030.¹⁷ The UK’s construction industry, with its expertise in lower carbon and sustainable materials is ideally placed to partner with Saudi Arabia in these ambitious projects.

There are also potential cross-border opportunities , as countries work towards greater trade and economic integration through major infrastructure projects. For example, momentum is building behind a proposed Gulf Railway connecting the Gulf Cooperation Council (GCC) states¹⁸ and the recently reanimated Friendship Bridge project linking Qatar and Saudi Arabia.¹⁹

The recent change in government in the UK could lead to a fresh set of opportunities, given Labour’s plans to boost the economy with a strong focus on infrastructure, specifically:

Housing – The UK suffers from an acute housing shortage, which the government is addressing via mandatory targets for councils in England. The goal is to deliver 1.5 million more homes before the next election, with an overhaul of the planning system to facilitate this.²⁰

The sector has already seen interest from MENAT corporates, with the Saudi based International Investment Gate investing £41 million into the regeneration of Brunswick Mill in Greater Manchester, creating 277 flats and 24 commercial outlets.²¹ Similarly, the deal between Graphene Innovations Manchester (GIM) and Saudi-based Organized Chaos, around £250 million has been earmarked for the building of a research and innovation hub in Greater Manchester.²²

Transport – With five bills in parliament, there are plans for the biggest overhaul to the sector in a generation. Strategic priorities include improving rail performance and driving forward rail reform; improving bus services; transforming infrastructure to serve the whole country, thereby driving wider social mobility; and better integrating transport networks.²³

Dubai-based logistics company, DP World, is investing £1 billion in London Gateway, Britain’s largest container port.²³ Along with the construction of two new shipping berths, the expansion includes the building of a second rail terminal to handle the anticipated rise in containerised trade, this could create multiple new trade opportunities for MENAT corporates.

Further infrastructure-related investments from MENAT countries include Masdar, the UAE’s clean energy giant, acquiring a 49% stake in RWE’s 3GW Dogger Bank offshore windfarm as part of a £11 billion investment in the UK’s renewables sector in December 2023.²⁵ While Mubadala Investment Company, Abu Dhabi’s strategic investment arm, expanded its digital infrastructure portfolio by investing in UK-based data centre developer Yondr in 2024.²⁴

The time is ripe for UK businesses to unlock the growth potential within this vibrant region, characterised by a swathe of mega and giga infrastructure projects. Equally, for MENAT corporates, the challenges of reforming and upgrading the UK’s existing infrastructure offers a different set of opportunities. For both regions, there is great trade potential driven by a vision of building a more sustainable future.