Riyadh to remain construction market leader

29 November 2012

Almost $250bn-worth of schemes are planned or under execution in the Saudi transport, social infrastructure and housing sectors

Saudi Arabia is the biggest construction market in the Middle East and North Africa region, with $114.5bn-worth of projects under execution and a further $128.7bn in the planning or bidding stage. After the crash of Dubai’s real estate sector in 2008, the kingdom overtook the UAE as the region’s largest construction market.

Despite being home to a vast number of planned projects, Saudi Arabia’s construction sector has witnessed a slowdown in contract awards in 2012. The $11.4bn-worth of construction deals awarded in the first three quarters is down by almost 60 per cent compared with the $27.4bn awarded during the same period in 2011.

Issues including government bureaucracy and technical and capacity challenges facing clients and contractors have been blamed for the slowdown. However, the medium-to-long-term outlook remains positive, with billions of dollars-worth of housing, social infrastructure and transport schemes in the pipeline.

Saudi top 5 construction awards, 2012
ProjectClientValue ($m)
King Abdulaziz International airport: aircraft maintenance facilityGeneral Authority of Civil Aviation765
Jizan housing projectDefence Ministry442
Minerals Railway passenger stations and headquartersSaudi Railways Company420
Umm al-Joud residential development Wahat Makkah400
Jabal Omar development: phase 2Jabal Omar Development Company350
For further information visit www.meed.com/meedprojects

A large proportion of the high-value construction contracts awarded in the kingdom in the last three years have been in the transport sector, particularly aviation and rail. The largest transport project in 2012 has been the $765m contract for an aircraft maintenance facility at King Abdulaziz International Airport in Jeddah.

The transport sector also accounted for the third-largest construction award to date this year, with Saudi Railway Company awarding an estimated $420m deal in January for passenger stations and headquarters intrinsic to its Minerals Railway project.

The kingdom is set to award further significant contracts in the transport sector over the next five years, with project management contracts tendered for both the $7bn Saudi Landbridge rail project and the estimated $10bn expansion of Riyadh’s King Khalid International airport in recent months.

Housing schemes

In March 2011, King Abdullah bin Abdulaziz al-Saud pledged to invest $70bn on building new homes for nationals. In 2012, contract awards have included an estimated $442m housing scheme for the Defence and Aviation Ministry in Jizan and an estimated $400m residential project in Mecca.

Upcoming tender deadlines
Riyadh metroArriyadh Development AuthorityQ4 2012
CAP 5: security networkInterior MinistryQ2 2013
Riyadh housing projectHousing MinistryQ4 2012
For further information visit www.meed.com/meedprojects

The kingdom’s Housing Ministry, formed in March 2011 to deliver on the king’s housing pledge, recently tendered a contract to build 7,000 housing units in Riyadh, the first large construction package of its ambitious housing programme.

Saudi Arabia’s efforts to develop its social infrastructure will also create opportunities in the healthcare and education sectors. The Interior Ministry is currently evaluating bids for two medical cities worth more than $6bn combined. The Health Ministry recently awarded US-based Hill International contracts to oversee the construction of two medical cities and 10 hospitals across the kingdom.

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