Market Research Report
Saudi Arabia Construction Market - Growth, Trends, and Forecast (2019 - 2024)
|Published by||Mordor Intelligence LLP||Product code||915503|
|Published||Content info||150 Pages
Delivery time: 2-3 business days
|Saudi Arabia Construction Market - Growth, Trends, and Forecast (2019 - 2024)|
|Published: October 1, 2019||Content info: 150 Pages||
The Saudi Arabian construction market is expected to register a CAGR of 6% over the forecast period, 2019-2024.
The Saudi Arabian construction market is expected to witness significant growth and offer lucrative potential, due to its Vision 2030, NTP 2020, and several ongoing reforms to diversify away from oil. The Vision 2030, NTP 2020 and private sector investment boost, and the ongoing reforms are likely to be the growth drivers for the Saudi construction market in 2018 and beyond.
Currently, the country's economy is entering a post-oil era in which the kingdom's mega-cities, which are under construction, will provide the country's future growth.
The Saudi Arabian construction industry was severely hit by cutbacks in capital spending during 2015-2016, following the crash in oil prices. As a result, several construction projects were canceled or postponed, in conjunction with delayed payments to contractors that led to large-scale layoffs.
In 2017, a wave of new mega-projects was announced in the Kingdom, with cities, including Taif, Jeddah, Makkah, and Medina, set to host new large-scale developments. The emphasis was on providing required homes for the growing Saudi population, driving further economic diversification, with projects aiming to attract investors in sectors, such as tourism, technology, and green energy.
According to the industry sources, more than 5,200 construction projects are currently ongoing in Saudi Arabia at a value of USD 819 billion. These projects account for approximately 35% of the total value of active projects across the Gulf Cooperation Council (GCC).
Saudi Arabia's Vision 2030, along with a significant investment in housing and infrastructure development promoted across the country by local authorities, are revitalizing the construction industry and generating interest in a growing number of international players.
The urban construction sector is the largest contributor to the construction sector expansion, with 3,727 active projects valued at USD 386.4 billion. The utility sector is the second largest contributor with 733 projects worth USD 95.6 billion, followed by transportation with 500 projects valued at USD 156.2 billion.
Some of the major urban construction projects in Saudi Arabia include: the King Abdullah Security Compounds (Phase 5), and the Grand Mosque (Holy Haram Mosque expansion), each valued at USD 21.3 billion and developed by the Ministry of Municipalities and Rural Affairs in Makkah.
The Saudi Arabian construction market covers the growing construction projects in different sectors, like commercial construction, residential construction, industrial construction, infrastructure (transportation construction), and energy and utility construction.
The significance of construction in Saudi Arabia is underscored by its suite of Giga projects; transport and mobility schemes, such as Riyadh Metro; social infrastructure developments, such as the Ministry of Housing's Sakani program; and energy megaprojects, such as the state-owned Aramco's Berri and Marjan oil fields.
Neom, the Red Sea Project, Qiddiya entertainment city, Amaala, Jean Nouvel's Sharaan resort in Al-Ula, Makkah Grand Mosque - Third Expansion, Jeddah Tower, Ministry of Housing's Sakani homes, Jabal Omar, Al Widyan, Riyadh Metro, Riyadh Rapid Bus Transit System, King Fahd Medical City Expansion, King Abdullah Bin Abdulaziz Medical Complexes, King Salman Energy Park (Spark), Saudi Aramco's Berri and Marjan, Hanergy Solar Park, Dumat Al Jandal Wind Power Plant, Saudi Aramco-Total's PIB factory, Pan-Asia bottling facility.
Neom's development has noted significant progress in 2019. In January 2019, the first flight landed at the trillion-riyal Giga project's site, when national carrier Saudia flew two Airbus A320 aircraft carrying 130 of the project's staff to Neom Airport. The airport in Tabuk region's Sharma is registered with the International Civil Aviation Organization as OENN.
The flight to Neom was followed by the approval of Neom Bay's masterplan approval by the Neom Founding Board, chaired by Saudi Arabia's Crown Prince HRH Prince Mohammed bin Salman bin Abdulaziz. Neom Bay will be the first urban area to be developed within the gig project's boundaries, which was instructed to complete preparations and start construction work in the first quarter of 2019.
Another one of Saudi Arabia's gig projects has also made progress in 2019. The Red Sea Development Company (TRSDC), developer of the Red Sea Project.
Phase 1 of the scheme is expected to be completed in 2022 and includes 14 luxury and hyper-luxury hotels that will comprise 3,000 rooms, all across five islands and two inland resorts. TRSDC said it's master plan preserves 75% of the destination's islands for conservation and designates nine islands as sites of significant ecological value. The master plan's creation required several redesigns to avoid potentially disrupting endangered species native to the area.
The Saudi Arabian construction market is highly competitive, with the presence of major international players. The Saudi Arabian construction market presents opportunities for growth during the forecast period, which is expected to further drive the market competition. With a few players holding a significant market share, the Saudi Arabian construction market has an observable level of consolidation.