Saudi Arabia’s construction market faces a difficult 2019 as short-term uncertainty takes precedence over confidence in the long-term future.

Construction companies and suppliers are becoming increasingly desperate for new work as major ongoing projects – such as the Riyadh Metro – are completed, despite government cutbacks in capital expenditure.

The problem is that while many new projects are planned, they are not moving quickly enough into the construction phase.

This is because Riyadh has spent the past three years rethinking how projects should be delivered in the kingdom. The first part of this drive has involved enhancing the effectiveness of project delivery in the kingdom by setting up programme management offices at government entities to oversee capital expenditure projects.

The increased professionalism will support the second part of the kingdom’s strategy, which is to use the private sector to deliver projects. These plans involve establishing public-private partnerships for projects across a broad range of sectors, while at the same time encouraging both foreign and domestic direct investment in projects, particularly in sectors such as real estate and tourism.

With the largest population in the GCC, Saudi Arabia is an enticing prospect for private sector firms looking for long-term opportunities. The challenge has been convincing the private sector to move ahead with projects. In late 2018, many companies were preoccupied with the news headlines and grew increasingly uncertain about the Saudi economy's short-term outlook.

The result is that while some projects are moving ahead, many more are not. Consultants working on early planning and feasibility studies in the kingdom say most proposed projects are being put on hold as companies wait to see how the market develops over the next one or two years.

With the private sector expected to remain nervous, the government and its related companies will start developing projects themselves. This is already happening with consultants and contractors being approached to build projects on a fast-track basis, with little programme management oversight or PPP involvement.

Revisiting the old ways of delivering projects will give construction companies new work opportunities and will help the market overcome the immediate challenges that 2019 presents, but will be a significant departure from what has been planned in recent years.