Skilled talent, strategic investments, and forward-thinking companies are the cornerstone elements driving growth in any sector. In Saudi Arabia’s construction sector, these essential components are already in full swing, clearly visible by the multitude of cranes dotting the skyline of the Kingdom’s cities.
The ongoing boom of the construction space in Saudi Arabia, which created millions of jobs, comes on the back of the Kingdom’s pursuit of large-scale developments such as state-backed mega and giga projects that include Qiddiya, Red Sea, and Amaala, among others.
This runs concurrently with significant renovation efforts as part of the Kingdom’s preparations to host the much-anticipated Riyadh Expo 2030 and FIFA World Cup 2034, providing a thrust to the construction space and a wealth of opportunities for companies entering the market.
Key Highlights
- Currently, the Kingdom holds the largest project pipeline in the region, estimated to be worth $1.5 trillion.
- Saudi Arabia’s construction sector is poised to be valued at $181.5 billion by 2028.
- Riyadh claimed the majority of the $140 billion in construction contracts awarded in 2023.
- The total value of projects awarded in Saudi Arabia between 2021 and 2025 is expected to reach $569 billion.
A Growing Business Appetite Fueled by a Sense of Urgency in Saudi’s Construction Sector
The buoyant outlook hinges on the ever-growing value of the construction market, which is on track to become the largest in the world by 2028, and that’s even two years before Vision 2030 officially comes to full fruition, underscoring the critical role it plays in not only enhancing economic opportunities but also paving the way for sustained economic prosperity.
With their diverse portfolio and advanced capabilities, global companies like Grankraft, Waagner Brio Steel and Glass, and WBG lead the Saudi construction space, each focusing on district specializations but collectively expanding it further. These global leaders are part of our expansion network and have recently entered the Saudi market with the help of our on-ground team.
Looking widely at the sector, the overall market size is expected to reach $181.5 billion by the end of 2028, up 30% from 2023 levels, demonstrating a healthy upward trajectory. Consequently, there is a heightened sense of urgency to foster an environment conducive to innovation and growth within the construction industry and economy, affecting businesses, job opportunities, and overall economic growth.
Expediting the awarding of contracts for various public projects drives the interest of international businesses in making their mark in Saudi Arabia. This is evidenced by the growing value of projects awarded in Saudi Arabia between 2021 and 2025, which amount to $569 billion.
Increased demand for residential and commercial properties, driven in part by rapid urbanization and population growth, remains a catalyst for investment appetite while also attracting novel players to the market. Contributing 12.2% to Saudi GDP in Q3 2023, the real estate sector continues to fare well across the wider construction sector as the government is trying to boost housing availability.
To keep up with that demand and increase in construction activities in the residential sector, the real estate sector’s GDP contribution is expected to rise to 10% by 2030 from 6% currently. These elements collectively underpin the sector’s positive momentum and position the country as a leading market regionally in terms of project pipelines (pre-execution), with a cumulative value of $1.5 trillion.
Riyadh Leads the Way in Saudi Arabia’s Construction Boom
Riyadh has emerged as the hotspot for construction activities due to the Saudi government’s aim to increase the city’s population to 10 million by 2030. This makes it a prime target for international companies looking to acquire construction contracts and participate in its ongoing transformation.
The majority of construction contracts, valued at over $140 billion in 2023 alone, were concentrated in Riyadh. The city also serves as the headquarters for international corporations that recently established a base in Saudi Arabia through the flagship “Regional Headquarters” program.
Companies benefiting from the program are offered cost incentives to launch and set up offices. They also receive corporate income and withholding tax breaks for 30 years, along with other incentives such as a 10-year exemption from Saudization requirements.
Tourism is a Cause and Beneficiary of the Saudi Construction Boom
The economic significance of the construction industry extends beyond its direct economic impacts, with back-and-forward linkages that support and benefit from the growth of key industries like tourism, a vital pillar of the economy in Saudi Arabia.
Central to the ongoing construction surge is a rapidly expanding hospitality sector. Travel demand continues to gather steam, further driving a lingering property sector’s upward trajectory as well as the need to increase accommodations in the hotel industry.
By 2030, the Kingdom is set to receive 150 million domestic and international tourists. At the core of this vision is a strategic plan to add 320,000 new rooms to existing hotels spanning diverse categories to cater to the unique needs of the Kingdom’s visitors.
These figures point to the need for a skilled workforce and global expertise. This will continue the development of hotel construction space to achieve the government’s goal of tourism contributing 10% to the economy by 2030.
The thriving economy and increased business opportunities have acted as a boon for the Saudi construction industry. The sheer scale and diversity of construction activities in Riyadh and other regions function as a magnet for international firms that seek to establish a sustainable development model in the local sector, poised for further growth and dynamism.
As opportunities abound, the construction sector becomes intrinsically linked to the Kingdom’s march towards economic prosperity. It also supports diversification objectives rooted in its Vision 2030.
Expand Your Construction-Focused Company to Saudi Arabia