Saudi Arabia Vision 2030 is one of the key drivers of the growth of the construction industry in the kingdom. This framework for diversifying the economy and improving public services to raise the standard of living in the country has directly impacted the KSA construction market. The kingdom’s sovereign wealth fund, Public Investment Fund (PIF), is pushing this growth through allocations for multibillion-dollar construction projects in KSA’s major cities.
In line with their plans for a post-oil economy, the government has banked on various developments and reforms that immediately contributed to the expansion of Saudi Arabia’s construction industry. Since it was first released in 2016, Saudi Vision 2030 has leaned heavily on the development of infrastructure to establish economic centers all over the kingdom. In addition, the government plans to establish Saudi Arabia as a major hub for foreign investment in the region.
How has Saudi Vision 2030 changed the construction landscape in KSA? What can contractors expect in the coming years as KSA’s construction market continues to develop?
The Megaprojects Driving KSA’s Construction Growth
Saudi Vision 2030 has been properly implemented in the kingdom in the last few years, and with the PIF funding the government’s major infrastructure budgets, the kingdom’s entry into a post-oil economy is underway. Building the country’s mega-cities, creating new transportation and mobility plans, and energy megaprojects are all massive undertakings that continue to drive KSA’s construction growth.
According to reports, there are 5,200 ongoing construction projects in the kingdom, valued at $819 billion. Two of these major urban construction projects include the expansion of Mecca’s Grand Mosque, with a cost of $22 billion, and Phase 5 of the Ministry of Interior’s King Abdullah Security Compounds, valued at $8 billion.
Another key project is the Al-Faisaliah City, considered a flagship project of Saudi Vision 2030. This major development includes an airport, industrial city, technology complex, cultural center, a pilgrims reception center, sports city, resort area, pilgrims’ reception center, and more. The development costs $25 billion, with the PIF taking an active role in its development, as the city fosters economic activity away from cities like Jeddah and Makkah.
More Infrastructure Investments
With government infrastructure projects driving KSA’s construction growth, public-private partnerships can help make it sustainable in the long run. The kingdom is open to foreign contractors, even those with no previous experience in the country.
In a recent white paper published by YCP Solidiance titled “Partnering for Success in Saudi Arabia Construction,” some of the key success factors for foreign contractors who want to enter the KSA construction market were outlined. These include the financial and project execution capability of contractors to handle capital-intensive projects, having a good track record, technical expertise and regional experience, and a solid commercial bid.
Contractors will find opportunities for residential community projects, green buildings and other sustainable developments, and transportation construction. As the kingdom continues to power the construction industry, there will always be opportunities for contractors who want to venture in to Saudi Arabia.