Saudi Arabia's construction sector seeing no slowdown in new contracts

Dubai: The construction sector in Saudi Arabia isn't seeing any sort of slowdown - at least going by the numbers during 2024.

Project awards across multiple sectors totaled $148 billion, up by 4.6%, according to new updates from the consultancy Knight Frank.

This puts the Saudi construction sector to continue on the growth path and reach a value of $191 billion in 2029, according to the company.

The Saudi government’s 'Vision 2030' strategy to 'aims to deliver over 1 million homes, more than 362,000 hotel keys, over 7.4 million square meters of retail space, and more than 7.7 million sqm of new office space by the end of the decade'.

Recently, there had been reports of possible resizing of some of Saudi Arabia's prestige projects such as the Neom. Some in the industry say that the new targets are more realistic when it comes to meeting the Kingdom's growth ambitions. The Saudi economy, meanwhile, continues to maintain solid growth on a quarter-on-quarter basis.

According to Faisal Durrani, Partner – Head of Research, MENA, at Knight Frank, "Construction contracts totalling more than $215.4 billion were awarded across Saudi Arabia between 2020 and 2025.

"Indeed, some $1.3 trillion is planned to be invested in real estate and infrastructure projects as part of Vision 2030, highlighting the breadth and scale of what is now being delivered.” 

According to Knight Frank, these contracts cut across multiple sectors:

* Riyadh remains a 'centre of construction activity', with $135.2 billion of contracts awarded since 2020. This is 63% of the total project awards across the Kingdom.

* The capital’s $195 billion development plan includes 4.6 million square meters of office space, 2.6 million square meters of retail, more than 28,800 hotel rooms and over 340,000 homes.

* Almost $24 million (29%) of construction contracts awarded in Riyadh have been for transport projects.

* The $22.5 billion Riyadh Metro project features six lines covering 176 kilometers with 85 stations and automated, driverless trains.

* The King Abdulaziz Public Transport Project will create a bus-based rapid transport system, while 'more than $5 billion is being spent on major road projects to support the city’s expansion'.

“Giga projects are a major hub of construction activity," said Amar Hussain, Associate Partner – Research, Middle East at Knight Frank.

"For example, the $50 billion 'New Murabba' project will transform 19 square kilometres of north-west Riyadh, creating 18 new neighbourhoods.

"In Western Saudi Arabia, a $685.5 billion real estate development plan centred on giga projects will deliver more than 382,000 homes, 330,000 hotel rooms, and office and retail space spanning upwards of 7.3 million sqm.

"These projects are designed on a scale far beyond anything else currently under construction in EMEA - and this bold vision is rapidly becoming reality...”