'Saudi construction sector faces tough times'

Construction giant Al-Khodari predicts a tough time ahead of Saudi due to budget cuts, the oil slump and painful labour reforms

State budget cuts, low oil prices and labour reforms are impacting Saudi's construction sector.
State budget cuts, low oil prices and labour reforms are impacting Saudi's construction sector.

Saudi Arabia's construction sector faces difficult times ahead as the prospect of state budget cuts adds to painful labour reforms and low oil prices, according to Al-Khodari.

Companies in the region have benefited from a construction boom over the past decade, thanks to high crude prices allowing the development of transport, social infrastructure and industrial facilities. 

However, the volume of of building projects looks set to shrink due to the slump in oil prices, Reuters reported.

The government, who face a mammoth budget deficit, may look to economise by introducing a slow down in construction, or indeed by shelving some projects. 

Government labour reforms have also impacted construction firms in Saudi Arabia. 

"I think we should expect the difficult situation in the (construction) sector to go on for 18 months," Fawwaz al-Khodairi, chief executive of Abdullah Abdul Mohsin al-Khodair Sons told Reuters.

He continued: "Companies are facing trouble mainly due to the labour reforms. We will see the result of the budget deficity later, but now we are in a situation where the pain is already there.

"I believe many projects that are not seen as being essential will be first to be shelved, including those that were tendered but not awarded."

 

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