Saudi construction market surges ahead in Q2
Research shows KSA construction deals hit 175% growth over Q1 figures
Boosted by massive government spending in infrastructure, Saudi Arabia awarded $6.5bn worth of construction contracts in the second quarter, 175% more than the value of awards in the first quarter, according to local data.
The country’s National Commercial Bank (NCB), as reported by Saudi Gazette, said that the government and private institutions had helped towards the increase, adding that the trend was likely to increase throughout the rest of the year.
The sectors that drove the growth were power (contracts worth $3.1bn) and residential real estate ($1.6bn).
“The number of construction contract awards in recent years has dramatically increased on the back of priorities set forth by the government as well as private institutions,” the NCB report said.
“These priorities have spurred numerous mega-projects across the kingdom as the focus on construction activities signaled the intention to expand the infrastructure capabilities as well as increasing the production capacity of all of the sectors affecting the construction industry.”
Overall, Saudi Arabia’s construction sector is forecast to grow by 6.4 percent this year, giving it an overall 10.4 percent share in GDP.
Data provided by NCB said that construction would contribute $17.1bn to the economy in 2010.
Growth in the segment will also be greater than that in the non-hydrocarbon sector, which is expected to grow by 4.4 percent this year.
Construction provides employment to 2.51m workers in Saudi Arabia, accounting for 40.4 percent of the workforce, up by 1.5 percent from the previous year.
“The increase in demand for construction labor reflects the growing volume of work being implemented,” the NCB report stated.
“We estimate that the investments made in 2009 would have increased the size of the construction sector’s labor force by four per cent to reach 2.62m workers. With this rise, we anticipate that sector’s share of the Kingdom’s total labor force to have remained unchanged.”
The value of awarded contracts was $55.2bn in 2009 and $29.6bn in 2009 and 2008, respectively.
Among the projects set to be awarded in the second half are the design and construction Jizan Refinery first phase for Saudi Aramco (estimated at $6.9bn), and the onshore construction package of the Wasit gas development programme (estimated at $6bn), also for Saudi Aramco.