Exploring Investment in Saudi Arabia Construction

What is the current outlook of the construction market in Saudi Arabia? Read here to understand current market trends and their potential.

May 2022 , by YCPS Marketing & Communication Group

As the Middle East construction industry navigates its post-pandemic recovery, the Kingdom of Saudi Arabia (KSA) is being touted as the region’s leading construction market due to several factors such as data trends, growing investor interest, and the country’s long-term commitment to bolstering construction efforts. 

According to data from Trade Arabia, the Saudi construction market is forecasted to perform well in 2022 as its initial value was already at 37 billion USD only two years prior. Given that the sector also registered an estimated CAGR of 5.2% for the period 2021 to 2026, the Saudi Arabian construction industry is exhibiting promising potential.

Saudi Vision 2030
Part of the reason why the Saudi construction industry is expected to perform well in 2022 is because of the goals set forth in the Saudi Vision 2030 initiative. In Saudi Arabia’s attempt to diversify its economy by becoming less reliant on oil resources, the construction sector will play an essential role.

Specifically, to increase non-oil government revenue, the country is adopting a long-term economical outlook focused on increasing domestic consumption while also strengthening the development of the private sector. Via the construction market, this may be achieved by capitalizing on specific trends, such as building infrastructure with the growing and digitally engaged population in mind. In the YCP Solidiance white paper “Partnering for Success in Saudi Arabia Construction,” the following key trends that will drive development in the KSA have been identified:

Steps to Public-Private Partnership
While initiatives like Saudi Vision 2030 and key drivers for long-term KSA development are important to the Saudi construction market, other factors will also play a major part. Namely, public and private partnerships between both domestic and international parties are expected to bolster growth. 

Before parties concerned with Saudi construction engage and collaborate by entering partnerships, some considerations must first be made. For foreign contractors, although the investment landscape has improved considerably in KSA, there are still risks that should inform investment decisions. The risks have been categorized as the following: 

Although these factors are important to consider as they carry a degree of risk, potential entrants should not be deterred from exploring the KSA construction industry. As affirmed by the commitment of the public and private sectors’ willingness to sustain development, the sector’s potential is immense as it presents several promising investment opportunities. As early as now, parties should proactively seek out possible partnerships as doing so could facilitate entry into the Saudi construction market. 

To learn more about the other business trends in Saudi Arabia and what opportunities these developments are presenting, subscribe to our newsletter here and check out these reports:

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