Saudi Arabia Takes the Helm in Worldwide Construction Endeavors – With a staggering $1.5 trillion worth of projects yet to be awarded, Saudi Arabia has surged ahead as the foremost initiator of construction ventures as of the first quarter, a study by a prominent real estate services firm indicates.
The Kingdom has clinched a 39 percent slice of the Middle East and North Africa’s construction market, amounting to $3.9 trillion. Within this trove, the real estate segment claims 62 percent or $950 billion, while the remainder, 38 percent or $582 billion, is spread across transportation, infrastructure, and utilities, as per the insights from MEED Projects.
Laura Morgan, a market intelligence expert, observed, “Saudi Arabia’s economic progression, growing demographics, and advancements are propelling it to the zenith of construction activities in the region, with real estate at the forefront in 2023.”
Morgan also acknowledged the sector’s enduring strength amidst global uncertainties, attributing it to the successful economic diversification initiatives of Saudi Arabia.
Forecasts suggest the nation’s GDP could ascend by 2.1 percent in 2024 and a robust 5.9 percent in 2025. The Kingdom’s stride towards fulfilling Vision 2030 objectives and infrastructural evolutions, particularly with EXPO 2030 on the horizon, affirms its stature as a construction powerhouse both regionally and internationally.
Despite the specter of inflation, soaring interest rates, and geopolitical strife, the outlook for Saudi Arabia’s construction sector remains upbeat. Drawing on data from MEED Projects, the sector witnessed an unprecedented climb in awarded projects in 2023, reaching $97 billion, a leap from the previous year’s $60 billion.
Morgan warns, however, that the fluctuating market conditions and the influence of construction costs on the sector’s vigorous expansion are factors that cannot be ignored.
Additional pressures such as skilled labor deficits, resource constraints, and an overheating market pose potential threats to the Kingdom’s construction pace. According to a Purchasing Managers’ Index report, construction firms have adopted cautious hiring strategies in the first quarter to mitigate costs and manage cash flows, exacerbating the existing skilled labor scarcity.
Despite recent challenges and supply disruptions, the first quarter showed a stable supply of materials,
the consultancy firm noted, adding that while the dependency on imported goods like glazing, facade systems, and timber remains, future prospects point to enhanced local production driven by the demand from major Saudi projects.