Saudi Construction Sector to Complete 5,000 Projects Worth $1.6 Trillion

Expectations of an active return to the construction sector to complete implementation of development projects in Saudi Arabia (Asharq Al-Awsat)
Expectations of an active return to the construction sector to complete implementation of development projects in Saudi Arabia (Asharq Al-Awsat)
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Saudi Construction Sector to Complete 5,000 Projects Worth $1.6 Trillion

Expectations of an active return to the construction sector to complete implementation of development projects in Saudi Arabia (Asharq Al-Awsat)
Expectations of an active return to the construction sector to complete implementation of development projects in Saudi Arabia (Asharq Al-Awsat)

The construction sector in Saudi Arabia has been the most affected by the suspension of economic activities during the coronavirus pandemic.

However, specialists in the construction and urban development sector have expected a strong resumption of work, which would contribute to reducing economic losses while completing pending projects.

They affirmed that smoothly starting economic activities can ensure the sector’s gradual recovery and reinforce expectations for an active return to construction in Saudi Arabia to complete the implementation of 5,000 projects worth $1.6 trillion.

These hopes come in light of the challenges facing the sector due to the coronavirus crisis, which has cast a shadow over Saudi contracting activity.

According to the Saudi Contractors Authority, a survey conducted on 600 contracting companies in Saudi Arabia has revealed the challenges facing Saudi contractors, mainly in cash flow, project delays, and supply chain disruptions.

It pointed to an expected decrease in awarded projects this year by 20 percent due to the pandemic.

Meanwhile, operating sources have stated that the Saudi market is expecting an active and gradual resumption of activity in the construction sector.

They pointed out that the boom in the conclusion of construction contracts in 2019 supports the restoration of this activity to complete the commitment to implementation during 2020, which would record growth during Q1 2021.

Fahad bin Mohammed Al Hammadi, former chairman of the Federation of Arab Contractors, expected early 2021 to experience a maximum flow of mega projects in the Kingdom.

He cited the Red Sea Development Project after raising the value of its awarding contracts to more than double in 2020, to increase from SAR2.3 billion ($613 million) in 2019 to SAR6.8 billion ($1.8 billion) in 2020.

He noted that the coronavirus pandemic has greatly affected the construction sector, as work was suspended in line with the precautionary measures imposed.

Another challenge was low oil prices, he stressed, adding that spending in the construction sector during 2020 was negatively affected by the pressure posed on the oil sector since the virus’s outbreak.

Fadl al-Buainain, a financial and banking analyst, told Asharq Al-Awsat that the construction sector was one of the most affected by the Kingdom’s suspension of economic activity.

He expressed hope that activities would resume strongly and contribute to reducing losses, gaining profits, and gradual recovery.



Saudi Business and Job Growth Hit 14-Year High

Riyadh, Saudi Arabia (AFP)
Riyadh, Saudi Arabia (AFP)
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Saudi Business and Job Growth Hit 14-Year High

Riyadh, Saudi Arabia (AFP)
Riyadh, Saudi Arabia (AFP)

Business conditions in Saudi Arabia’s non-oil private sector improved notably in June, driven by a marked rise in customer demand and expanded production, according to the latest Riyad Bank Purchasing Managers’ Index (PMI) data.

New business volumes surged, fueling the fastest pace of employment growth since May 2011. This strong demand for workers pushed wage costs to record highs, adding pressure on overall expenses and contributing to a fresh increase in output prices.

The headline PMI climbed to 57.2 in June from 55.8 in May - its highest level in three months and slightly above the long-term average of 56.9. The reading signaled a robust improvement in the health of the non-oil private sector economy.

Companies reported another rise in new orders last month, with growth accelerating following a recent low in April. Many firms cited gaining new clients, alongside improved marketing efforts and stronger demand conditions. Domestic sales were the main driver of the increase, while export sales edged up slightly.

Purchasing Activity Expands

Production continued to expand through the end of Q2, although growth slowed to a 10-month low. Purchasing activity picked up sharply as companies sought to secure additional inputs to meet rising demand, with the pace of purchase growth reaching its fastest in two years.

Employment growth accelerated as businesses rapidly expanded their workforce to keep pace with incoming orders, pushing hiring to the highest level since mid-2011. This strong recruitment trend, which began early in 2025, was largely driven by a rising need for skilled workers, prompting companies to increase salary offers. Consequently, overall wage costs rose at the fastest rate since the PMI survey started in 2009.

Facing mounting cost pressures from higher raw material prices, firms raised their selling prices sharply in June , the biggest increase since late 2023, reversing declines recorded in two of the previous three months. This price hike largely reflected the passing of higher operating costs onto customers, although some companies opted for competitive pricing strategies by cutting prices.

Resilient Economic Outlook

Looking ahead, non-oil private sector firms remained confident about business activity over the next 12 months. Optimism hit a two-year high, supported by resilient domestic economic conditions, strong demand, and improved sales. Supply-side conditions also showed positive momentum, with another strong improvement in supplier performance.

Dr. Naif Alghaith, Chief Economist at Riyad Bank, said: “Future expectations among non-oil companies remain very positive. Business confidence reached its highest level in two years, underpinned by strong order inflows and improving local economic conditions.”

He added: “However, cost pressures became more pronounced in June, with wage growth hitting record levels as companies compete to retain talent. Purchasing prices also rose at the fastest pace since February, partly driven by increased demand and geopolitical risks. Despite these challenges, companies broadly raised selling prices to recover from May’s declines, reflecting an improved ability to pass higher costs onto customers.”