Saudi Arabia: Building for its people today

15 August 2011

The kingdom tops the Gulf projects market again as Riyadh invests in construction for its present population, not a projected one

It should not be a surprise that Saudi Arabia has awarded almost half the contracts let this year in the GCC. With a population of 26.1 million, almost 65 per cent of all the people in the GCC live in the kingdom.

That is why its projects market is the most active. Riyadh is building infrastructure for real people that exist today. This year, it has awarded major contracts for homes, schools, universities, power plants, roads and airports. And with $623bn of projects planned or under way in the kingdom there are billions of dollars of contracts yet to be awarded in the coming years.

Saudi Arabia has awarded major contracts for homes, schools, universities, power plants, roads and airports

Most of the state-funded projects are part of Riyadh’s Ninth Development Plan that will see $385bn spent on developing the kingdom by late 2014. This plan is radically different to the economic plans outlined in other GCC states such as the UAE and Qatar. In 2006-07, Dubai and Abu Dhabi created visions based on a “build and they will come” philosophy, which catered for future populations that did not currently exist. Similarly, Qatar is planning to invest billions in infrastructure for people visiting the peninsula for the 2022 Fifa World Cup competition.

The problem for the UAE is that with the economic downturn it seems unlikely that those people will ever materialise. Looking forward, Qatar’s plans also appear far from robust once you consider whether the infrastructure it plans to build will be used after the World Cup.

In Saudi Arabia, it is different. It is building for people that are there today, and with a population growth rate of more than 2 per cent a year, there will be more of them tomorrow. That is why Riyadh has to invest in new infrastructure for its people. The private sector is also prepared to take part.

That does not mean the days of Dubai’s real-estate bubble will be replayed in the kingdom. The private sector should remember that the demand is strong, but not unrealistic. 

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