Construction Sector in Saudi Arabia
The construction sector in Saudi Arabia is experiencing unprecedented growth. The numerous cranes decorating the Kingdom’s cities’ skylines make this clear. Skilled talent, strategic investments, and innovative companies are driving this surge. These elements create a robust foundation for the sector’s expansion.
Saudi Arabia to Become the World’s Largest Construction Sector by 2028
Saudi Arabia’s ambitious mega and giga projects lie at the heart of this boom. Projects like Qiddiya, Red Sea, and Amaala are transforming the country’s infrastructure. They generate millions of jobs and attract global attention. The Kingdom is also preparing for major events like Riyadh Expo 2030 and FIFA World Cup 2034. These preparations further fuel construction and open doors for new market entrants.
Key Highlights
– Saudi Arabia boasts the largest project pipeline in the region, valued at approximately $1.5 trillion.
– The construction sector is projected to reach $181.5 billion by 2028.
– In 2023 alone, Riyadh secured the majority of $140 billion in construction contracts.
– Between 2021 and 2025, the total value of awarded projects is expected to hit $569 billion.
A Growing Business Appetite and Urgency in the Construction Sector in Saudi Arabia
The construction sector in Saudi Arabia has an optimistic outlook. It is on track to become the world’s largest by 2028, ahead of the Vision 2030 timeline. This growth enhances economic opportunities and lays the groundwork for sustained prosperity.
Global companies like Grankraft, Waagner Brio Steel and Glass, and WBG lead this expansion. They bring diverse expertise and capabilities to the Saudi market. Supported by local teams, these industry leaders drive innovation and growth. The market size is expected to grow by 30% from 2023 to 2028. This demonstrates the sector’s robust health and the need to foster an environment conducive to business innovation.
Expedited awarding of public project contracts sparks significant interest from international businesses. This interest is reflected in the $569 billion worth of projects awarded between 2021 and 2025. Rapid urbanization and population growth increase the demand for residential and commercial properties. This continues to attract new players to the market. The real estate sector contributed 12.2% to Saudi GDP in Q3 2023. Its GDP contribution is expected to rise from 6% to 10% by 2030.
Riyadh: The Epicenter of Saudi Arabia’s Construction Boom
Riyadh has emerged as the focal point of the construction boom. The government aims to boost the city’s population to 10 million by 2030. This ambition makes Riyadh a prime destination for international companies seeking construction contracts and participation in its transformation.
In 2023, Riyadh secured construction contracts worth over $140 billion. The city also serves as the base for international corporations that have recently established operations in Saudi Arabia through the “Regional Headquarters” program. This program offers significant incentives, including tax breaks and exemptions from Saudization requirements, to attract businesses to set up offices in the Kingdom.
Tourism: A Catalyst and Beneficiary of the Construction Surge
The construction sector’s economic impact extends beyond direct contributions. It fosters growth in key industries like tourism. The hospitality sector is expanding rapidly to meet increasing travel demand. By 2030, Saudi Arabia aims to welcome 150 million domestic and international tourists. The Kingdom plans to add 320,000 new hotel rooms to accommodate this influx. These rooms will cater to diverse visitor needs.
This growth necessitates a skilled workforce and global expertise. The development of the hotel construction space drives these efforts. The government’s goal of tourism contributing 10% to the economy by 2030 hinges on these developments.
The thriving economy and expanding business opportunities make the Saudi construction industry a magnet for international firms. Extensive and varied construction activities across Riyadh and other regions attract companies eager to contribute to the Kingdom’s sustainable development model. As the sector continues to grow, it becomes increasingly intertwined with Saudi Arabia’s economic prosperity and diversification goals outlined in Vision 2030.
In summary, the construction sector in Saudi Arabia drives the Kingdom’s march toward economic prosperity. Skilled talent, strategic investments, and forward-thinking companies propel its growth, positioning the sector for continued dynamism and expansion.