Contractors have given up on the state housing scheme and will settle for the industrial residential projects
If you had told Saudi contractors in early 2013 that industrial clients would become the major state housing customers during the next year, they would have been very disappointed. Unfortunately, this has become a reality.
The residential packages tendered by Saudi Arabian Mining Company (Maaden) and Saudi Basic Industries Corporation in September are two of the largest government housing schemes to be tendered in 2013. While contractors are always happy when work is tendered, they are disappointed that the kingdoms multibillion-dollar housing programme has failed to materialise.
In March 2011, in the wake of the Arab Uprisings, King Abdullah bin Abdulaziz al-Saud pledged to spend upward of $70bn on solving the kingdoms housing crisis. The focal point of the initial spending would involve providing 500,000 homes for lower-income Saudi Arabians. The king ordered the creation of the Housing Ministry to oversee the scheme. In late 2012, the first major packages were tendered, which included the construction of 7,000 villas in Riyadh. However, in April this year, the ministry cancelled the deals and decided that it would turn to the private sector to develop the homes.
With the promise of large contracts gone, Saudi Arabias large contractors have given up on the governments housing programme. While firms have been left disappointed by the Housing Ministrys efforts, the industrial residential schemes will provide some solace.