Saudi Arabia’s Construction Sector Powering Vision 2030
The infrastructure and construction industry is a crucial pillar of the government’s plan to overhaul the Saudi Arbia economy according to Deloitte.
Prior to the Covid-19 outbreak, it was reported that the infrastructure and construction industry in Saudi Arabia was amongst the largest in the Gulf Cooperation Council (GCC) region, with more than $825 billion worth of planned and unawarded projects. The industry had seen growth in the contracts awarded – from $11.2 billion in 2016 to $14.6 billion in 2018.
However, given the volatility experienced around the world as a result of the recent pandemic and the fluctuating oil price, the forecast for construction output growth has been revised from 4.6% to 2.9% in 20203. This forecast is based on a positive scenario that the market will return by the third quarter of 2020, with eased travel restrictions which will aid international mobility into the Kingdom. However, if this mobility forecast should alter, then there may be a further downgrade expected to the output growth projections, which are dependent on international infrastructure specialists and government support.
With increased focus from both the private and public sector, the need for infrastructure and construction development will continue to grow in line with Vision 2030. As the Kingdom further opens the leisure and hospitality market, the ease of travel to the Kingdom will continue to drive growth in the hospitality sector.
This has seen an increase in the number of rooms being built, leading to international hoteliers having an increased construction and development need to drive their growth ambitions, supported by foreign direct investment.
Saudi Arabia has embarked on a journey to undertake a large-scale economic overhaul, which has seen both private and public sector companies focused on reforms, further supporting Vision 2030. To accomplish these goals, the government has created the National Transformation Project (NTP), an action plan to improve three overarching and important pillars of the country: economic enablers, standards of living for its citizens, and governmental operational excellence.
Vision 2030 and the NTP provide the foundations underpinning the integration of sustainable development goals into the national planning process. One of the key programs of Vision 2030 – Life Quality – is directly linked to the sustainable development goals. At the heart of all this sits Saudi Arabia’s infrastructure and construction industry.