Beirut: Real GDP growth of Saudi Arabia's construction sector is expected to expand 6.4 per cent this year on the back of increased government investments, following a growth rate of 1.5 per cent and 4.7 per cent in 2008 and 2009 respectively, National Commercial Bank (NCB) said in a special report yesterday.
The sector's share in the kingdom's non-oil GDP fell marginally in 2008, but it is forecast to reach an all-time high of 10.41 per cent by the end of this year, the report said.
Bank lending to the Saudi construction sector rose 7.8 per cent in the first quarter this year, a clear sign that confidence in the sector is returning. Lending to the sector had dried up as banks felt overexposed after five years of heavy lending. Bank credit to the sector fell by 17.7 per cent to 44.7 billion riyals (Dh43.7 billion) in 2009 as the economic crisis brought with it declines in private investment, a shrinking of bank credit, and a number of project cancellations.
The kingdom has 687 current projects, 22 per cent of which are in the execution phase, that are valued at approximately 2.6 trillion riyals. According to NCB, contracts awarded in 2010 and 2011 are forecast to reach $64 billion and $86 billion, respectively.
