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Saudi: Contracts worth $27bn to be awarded in 2017

Saudi Arabia’s construction sector will contract by approximately 9% in 2017, with contract awards totalling $27bn, according to Faithful+Gould’s David Clifton

Saudi Arabia’s construction sector will contract by 9% in 2017, compared to 2016 estimates, according to Faithful+Gould’s David Clifton.
Saudi Arabia’s construction sector will contract by 9% in 2017, compared to 2016 estimates, according to Faithful+Gould’s David Clifton.
Faithful+Gould’s David Clifton (above) forecasts that contracts worth $27bn (SAR101bn) in Saudi Arabia in 2017.
Faithful+Gould’s David Clifton (above) forecasts that contracts worth $27bn (SAR101bn) in Saudi Arabia in 2017.

Saudi Arabia’s construction sector will witness a year-on-year contraction of approximately 9% in 2017, with contract awards totalling $27bn (SAR101bn).

This is the view of David Clifton, regional development director at Faithful+Gould, who forecasts that the kingdom’s construction sector will struggle to match the $29.9bn (SAR112bn) of contract awards expected this year.

In his Q3 2016 Saudi Arabia update, Clifton said that the decline would be driven by the project management office (PMO) implementation, and the subsequent lack of government work.

“In 2017, the construction market will again be reliant on private developers and Saudi Aramco,” Clifton explained.

“This situation is forecast to ease only in 2018, although there is a strong case for one-off major infrastructure awards, as in the instance of Mecca Metro.”

Clifton said that Mecca Metro would also have a significant bearing on the overall performance of the kingdom’s construction sector in 2016.

“This year, we forecast $29.9bn (SAR112bn) of construction awards in Saudi Arabia,” he noted. “Up to Q3 2016, we witnessed awards of $18bn (SAR67.5bn). Mecca Metro will have to be awarded, as per Royal Decree, for our upper estimates to be achieved.”

Clifton also observed that government efforts to modernise and cut costs within Saudi Arabia’s construction sector have already commenced.

“We have seen cuts in government salaries and the lifting of fuel subsidies, and we forecast additional reductions in subsidies for power and water,” he said. “A continued streamlining of the public sector is expected, and may bear witness to the amalgamation of ministries and governmental departments.”

To read Clifton’s UAE and Saudi Arabia updates for Q3 2016 in full, click here.

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