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Saudi Arabia construction notes Q4 2018 growth despite payment delays

Rics report states workload and business enquiries increased in Saudi and Oman despite greater instances of late payment

Saudi Arabia's building sector grew in Q4 2018 [representational image].
© Pixabay / Dimitrsvetsikas
Saudi Arabia's building sector grew in Q4 2018 [representational image].

Saudi Arabia saw an uptick in construction activity in Q4 2018, but contractors in the UAE and Oman are expected to face declines in tender prices and profit margins in 2019.

Key infrastructure sectors in Saudi Arabia experienced solid growth during the quarter, according to the Royal Institution of Chartered Surveyors' (Rics) Middle East Construction and Infrastructure Survey Q4 2018.

Regional expectations for 2019 are “somewhat mixed” according to the report, with survey respondents anticipating an increase in workload over the next 12 months.

“Tender prices for both building and civil engineering are expected to decline, along with profit margins remaining under pressure in the UAE and Oman,” Rics added.

Saudi Arabia's construction activity rebounded in Q4 compared to Q3 due to “headline infrastructure workloads increasing”. An improvement in operating conditions during Q4 2018 was also noted by respondents.

“The increase in infrastructure workloads was broad-based in the last quarter, with water, utilities, road, rail, and energy projects all experiencing robust growth," Rics' report said.

The same period saw new business enquiries and workload increasing marginally in Saudi Arabia, despite an increase in payment delays in both the kingdom and Oman.

Fifty two percent of respondents from Saudi and 42% from Oman also reported skills shortages, citing this as a "significant factor holding back activity".

For the second consecutive quarter in a row, building information modelling (Bim) managers remain the most in-demand staff across the region, with 59% of Oman respondents, 52% from Saudi, and 41% from the UAE all reporting a shortage of Bim experts. 

The results comes amid a flurry of infrastructure announcements from Saudi Arabia. Earlier this month saw HRH Prince Turki bin Talal bin Abdulaziz, the Governor of Asir, unveil multibillion-dollar infrastructure projects in Saudi Arabia to improve medical, road, and air transport services in the kingdom.

In February 2019, King Salman bin Abdulaziz Al Saud, Custodian of the Two Holy Mosques, approved 1,281 cross-sector development projects in Riyadh.

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Construction Week - Issue 743
Jun 01, 2019