Saudi Arabia’s construction sector continues to be at the forefront of national economic growth and diversification efforts. The critical sector represents a major economic force, accounting for up to 7% of its GDP, making it the second-largest non-oil sector and one of its largest employers.
With several Vision 2030-led development projects in the works, the sector is poised to reach new heights on the back of the record growth observed in the past few years ever since Vision 2030 was put into action. This measured progress is largely owed to robust government spending on infrastructure projects, population growth, and the country’s pro-business environment. All these factors point to a strong market outlook for the Saudi construction and housing sector.
Growth of Saudi Arabia’s Construction Sector At a Glance:
- Saudi Arabia’s construction sector is crucial to the national economy, accounting for up to 7% of the GDP and being the second-largest non-oil sector and one of the largest employers in the country.
- Saudi Arabia leads the MENA region’s construction project pipeline, holding 39% of the region’s projects worth $1.5 trillion
- The construction market is projected to grow to $70.33 billion in 2024 and $91.36 billion by 2029
- High-growth companies can capitalize on the increasing number of infrastructure and residential projects, driven by Vision 2030
- There are significant opportunities in advancing sustainable construction technologies, supported by initiatives like the Saudi Green Building Code and partnerships focused on green building practices.
Robust Growth Projections Grounded in Favorable Market Conditions
As we settle into 2024, the construction space appears to be going from strength to strength, pulling in a stronger influx of businesses and public investments in the upcoming period. The value of total projects either completed or in execution was estimated at $60 billion in 2023, up from $44 billion in 2022.
The rise in demand for construction across various segments resulted in the Kingdom claiming the lion’s share of project pipelines across MENA. Currently, the Kingdom holds 39% of the region’s project pipelines, equivalent to $1.5 trillion. Together, the Kingdom and the UAE account for over $2 trillion in unawarded MENA projects.
The sector’s transformation encompasses significant advancements spanning infrastructure projects and ongoing and prospective developments, with the main thrust coming primarily from the Kingdom’s giga projects. Besides, a slew of projects are taking place across the Kingdom to increase residential and commercial output as the country continues to host a growing number of firms from all over the world.
On a national level, the country looks to meet its goal of 70% homeownership by 2030; towards that end, the flagship Sakani program was launched in an effort to increase access to homeownership; the program, founded by the Ministry of Municipal Rural Affairs and Housing and the Real Estate Development Fund, has so far helped more than 101,230 Saudi families last year move into their own houses.
The ever-expanding construction market has positioned the country as a desirable destination for businesses seeking to establish a reliable and efficient base of operations and capitalize on opportunities offered by the region’s largest market for construction.
It is estimated that the Saudi construction sector will be worth $70.33 billion in 2024 and reach $91.36 billion by 2029, registering a CAGR of 5.3%. The largeness of the market opportunity has contributed to the rise of the Kingdom as the ideal environment for high-growth companies pursuing a window of opportunity with considerable success. Examples of these companies include Waagner Biro Steel and Glass, Grankraft, and WBG, all of which are global leaders that expanded to Saudi Arabia with the help of our on-ground team.
With large-scale construction happening on the ground, Saudi Arabia is proving its readiness to be the ideal host country for mega-events such as Expo 2030 and Fifa World Cup 2034, further boosting its attractiveness as a leading business hub and pushing the growth of its non-hydrocarbon economy.
Sustainability Remains at the Core of Saudi Arabia’s Construction Sector
The Kingdom’s evolving landscape of construction is shaped by the government’s focus on green building practices as part of its compelling narrative to provide global leadership in sustainability efforts.
Initiatives like the Saudi Green Building Code play a pivotal role in the industry’s strategic shift away from carbon-intensive resources; moreover, financial and regulatory incentives are being offered to companies incorporating sustainability into their building materials and business strategies.
The emphasis on reducing the sector’s carbon footprint opened the door for groundbreaking new collaborations. That includes a recently formed partnership between SGG International Corporation, a subsidiary of Thailand-based Siam Cement Public Company, and Saudi construction company Buna Al Mamlaka, with the aim of advancing sustainable construction technologies in the Kingdom.
Moreover, the industry’s pivot towards disruptive technology and sustainable building techniques put into focus the increasing importance of environmental, social, and governance (ESG) practices all over the world.
With ESG being one of the notable focuses of businesses across diverse sectors, most notably construction, the Kingdom acts as a centerpiece for sustainability-focused consulting companies such as RSK.
RSK, one of our expansion leaders, is working to help businesses nationwide stay ahead of the curve and propel them toward being compliant with the new emission standards.
With global best practices being conducted in the Kingdom’s construction sector, more businesses will be prompted to embrace innovation and adopt cutting-edge technologies to enhance efficiency and quality while meeting sustainability targets.
In its monumental stride toward a diversified economy, the Kingdom is well on its way to establishing a globally competitive construction industry, one that plays a crucial role in achieving the goals of Vision 2030 by creating a sustainable, resilient, and greener future.