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    • Aug 20

The Golden Age of Saudi Construction

Opportunities for international businesses
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Is it still worth pursuing construction in Saudi Arabia? Yes. All of our staff live and work in the Kingdom. We're living and breathing the transformation as it happens and see those business opportunities every day. Sometimes, here in Riyadh, it feels as though we're living in a construction site, but now is definitely the time to grasp those opportunities firmly and explore the potential for international business.

What's happening in Saudi construction?

According to Mordor Intelligence, the Saudi construction market will grow at a rate of 5.6% a year from 2021 to 2026. There are huge opportunities for investment in this sector.


In fact, attendees at Big 5 this year described the next five years as the 'golden age' of construction in Saudi Arabia. The market, estimated at $200 billion and ranked in the top three most enticing markets in the world alongside China and India, has led many experts to compare the current Saudi landscape to Dubai 20 years ago.


This unprecedented boom is driven by Vision2030 - the ambitious plan to diversify the economy from oil dependency, and foster growth in tourism, entertainment, and infrastructure. With a robust giga-project pipeline, the Kingdom offers major opportunities for international businesses to engage, contribute and profit from the transformative agenda. If you're working in construction or construction related business, AEI can help you with all aspects of Saudi mobilisation.


Where is construction happening in Saudi?

Several high-profile giga projects highlight the scale and ambition of Saudi Arabia's construction plans. These include:


  1. Neom: Spanning 26,500 square kilometres, this $500 billion megacity will be a hub for innovation and sustainability. Neom will feature cutting-edge technology and renewable energy, offering many opportunities for international firms specialising in smart city infrastructure and sustainable development. As Neom’s CEO, Nadhmi Al-Nasr, stated, "Neom is a vision of what a new future might look like—the whole city will be built from the ground up, with sustainability at its core."

  2. Red Sea Project: Encompassing 28,000 square kilometers of islands, deserts, and mountains, this luxury tourism project is creating a world-class destination with minimal environmental impact. International expertise in sustainable tourism development and eco-friendly construction techniques will be crucial to its success. John Pagano, CEO of The Red Sea Development Company, said, "Our ambition is to deliver a new kind of tourism experience, one that is grounded in sustainability and cultural immersion."

  3. Qiddiya: Positioned as the future capital of entertainment, sports, and the arts, Qiddiya will include theme parks, sports arenas, and cultural institutions. The project will benefit from international companies' experience in large-scale entertainment and leisure developments. Mike Reininger, CEO of Qiddiya Investment Company, noted, "Qiddiya will become a place of inspiration, discovery, and engagement."

  4. Riyadh's Airport City: A key project that should transform the King Khalid International Airport area into a global business, tourism, and logistics hub. The development, estimated at $10 billion, will feature commercial, residential, and recreational facilities alongside advanced infrastructure and sustainable practices.

  5. New Murabba: With an estimated investment of $8 billion, this will be a central piece of Riyadh's urban transformation. This modern urban district will include residential, commercial, and cultural spaces anchored by the Mukaab, a striking landmark inspired by traditional Najdi architecture.


Is it worth pursuing Saudi construction?

A sense of perspective is key. The business press has reported a slowdown. But more than $190 billion worth of deals are still to be had, right across the Kingdom.


  • Riyadh: Riyadh is a focal point for many large-scale projects. The Riyadh Metro alone is valued at $22.5 billion, and other developments in infrastructure, housing, and commercial projects contribute significantly. Total construction opportunities in Riyadh could exceed $100 billion.

  • Dammam: As a major port city and industrial hub, Dammam is seeing significant investment in industrial projects, logistics hubs, and residential developments. The construction opportunities in Dammam are around $40 billion.

  • Jeddah: Jeddah, the gateway to Mecca, is experiencing a surge in tourism and infrastructure projects, including the Jeddah Tower and various waterfront developments. The estimated value of construction opportunities in Jeddah is approximately $50 billion.


Opportunities for international businesses

International businesses are in an ideal position to capitalise on Saudi Arabia's construction boom. Broadly speaking, the opportunities can be categorised as follows:


  1. Infrastructure Development: There's a substantial demand for advanced engineering, construction management, and project execution skills. International firms known for their reliability and innovation are highly sought after.

  2. Sustainability and Environmental Services: Saudi Arabia is placing a strong emphasis on sustainable development. International companies with expertise in green building practices, renewable energy, and environmental consultancy can contribute significantly.

  3. Smart City Technologies: Projects like Neom and the Riyadh Metro require sophisticated integration of their technology. International businesses are at the forefront of smart city innovations, IoT solutions, and data analytics, which are essential for these developments.

  4. Marketing and Branding: The surge in new developments had created a demand for world-wise marketing and branding companies to position and promote these projects. International firms can leverage their expertise in other nations to craft compelling narratives and visual identities that attract investors and residents.

  5. Interior Design: There's a high demand for innovative, culturally resonant, and sustainable interior spaces in these ambitious projects. These provide opportunities for interior design companies to showcase their creativity and contribute to modernizing Saudi Arabia’s urban landscape.

  6. Entertainment and Tourism: With the rise of projects such as the Red Sea Project and Qiddiya, there is a growing need for companies specialising in leisure, hospitality, and cultural projects. International expertise in creating world-class tourist attractions and facilities is invaluable.


Why international expertise is vital

To succeed, Vision2030 needs more talent than is available domestically or regionally. As Ben Breen, Global Director of Construction PMI, puts it, with '30 to 40 years of work on the table', there is a sustainable future for businesses wanting to invest.


Moreover, foreign firms have a reputation for being collaborative. This fosters knowledge transfer, upskills the local workforce, supports the Saudisation agenda and ensures long-term sustainability. In other words, the door is open for international business.


This business model helps achieve immediate project goals and contributes to Vision 2030's broader economic diversification and development objectives.


If you are an international business in the construction industry or the supply chain, reach out to AEI at info@aeisaudi.com and we can discuss your needs.


References

Arabian Gulf Business Insight, Foreign expertise vital for Saudi construction. from https://www.agbi.com/analysis/construction/2024/02/foreign-expertise-vital-for-saudi-construction/

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