Riyadh’s building plans offer hope

18 November 2010

The kingdom’s infrastructure plans are an opportunity for the region’s work-hungry contractors

With much of the region still feeling the impact of the global recession and the downturn in the property market, Saudi Arabia is emerging as the region’s new construction heavyweight.

With almost a trillion dollars worth of projects in the Middle East and North Africa having been put on hold or cancelled during the downturn, the kingdom’s construction market is offering hope to the region’s work-hungry contractors.

After forty years of underdevelopment, King Abdullah bin Abdulaziz al-Saud is aware that much needs to be done. Riyadh is investing $385bn over the next five years to develop civil infrastructure. In addition to new homes, a growing population requires social infrastructure such as schools and hospitals, and improved and expanded transport networks.

The world’s biggest oil producer is also investing heavily in large industrial schemes in an attempt to diversify its economy.

Saudi Arabia’s development programme will not only be of importance to the kingdom’s growing population, it will result in a raft of new projects and much needed work for the region’s construction sector.

But it will not be an easy task. The kingdom is still a difficult market for foreign companies to enter and one that few major international contractors have been able to penetrate. Numerous barriers to entry and the dominance of local firms mean that it will take time for international contractors to gain a foothold.

Progress is starting to be made. In the past year, contractors from the UAE have managed to enter the Saudi market, winning some projects in partnership with local firms. If Riyadh is to build all that is planned, it will require outside assistance. If foreign firms are willing to persevere and overcome entry barriers, plenty of work awaits them.

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