BlackRock: Gulf capital expenditure to reach $2.1 trillion by 2030

Bloomberg – Tensions in the region, alongside the artificial intelligence boom, have opened up investment opportunities in the Gulf, driven by the growing need to develop defense industries and diversify oil transport routes, in parallel with the expansion of digital infrastructure and modern technologies.

Ben Powell, Head of Investment Strategy for the Middle East, Asia, and the Pacific at BlackRock Investment Institute, told the “Middle East Indicators” program that investor interest in the region has increased despite the complex conditions it has experienced over the past six months. Investment opportunities have become clearer, as governments move to develop economies, expand defense industries, and build more pipelines to transport oil in different directions.

BlackRock Investment Institute estimates strategic capital expenditure in Gulf countries at around $2.1 trillion by 2030, with more than 80% of it directed toward sectors outside oil and gas exploration.

According to the institute, Saudi Arabia holds the largest portfolio of projects and investment opportunities in the region, while the UAE benefits from diversified transport routes and infrastructure. Meanwhile, the war and shipping disruptions have reshaped investment priorities toward strengthening supply chain resilience, diversifying export routes, and developing ports, energy, and water infrastructure.

Powell believes the next investment cycle requires continuing to build traditional infrastructure and enhancing connectivity among Gulf countries. He noted room for more airports and roads to support growth in the coming years, alongside the expansion of future technology infrastructure.

At the forefront of these opportunities is AI infrastructure, which benefits from the convergence of abundant energy, supportive regulatory frameworks, and human capital in the Gulf, along with existing talent in the region and others eager to relocate there.

He predicted that data centers and their associated ecosystems, including the electricity and energy required to operate them, would be among the first to benefit from this expansion. The advantages of adopting these technologies will extend across various sectors by improving business operations, increasing corporate productivity, and boosting the economy.

He described the growing demand for capital to fund data centers, energy, and chips as a significant opportunity for investors, including Gulf investors, emphasizing that participation in financing these projects must be linked to achieving returns.

Powell explained that the expansion of opportunities comes within a more complex financing environment. He noted that rising interest rates and borrowing costs in recent years have made investments more challenging compared to the low-rate period, and he expects this trend to continue.

He clarified that BlackRock’s project selection depends on the clarity of the regulatory and legal environment, future returns, and the alignment of opportunities with societal needs and government priorities.

Digital infrastructure serves as an example of this alignment in the Gulf. Government interest in its development gives investors confidence in the continuity of supportive regulatory frameworks, helping to attract investments and generate returns.

With growing project financing needs, Powell anticipates an expansion of capital market opportunities in the Gulf, particularly in Saudi Arabia, as private markets and fixed-income instruments grow.

In this context, he emphasized that private credit plays an important role as an alternative financing source, having become a core component of global investment portfolios. However, he stressed the need for selectivity, caution, and precision in allocating funds and choosing opportunities.