Saudi Arabia's booming construction sector: key factors in what is expected to be the world's largest construction market

Jun 27, 2024

by Internet

Market Insight
Saudi Construction
Vision 2030
Residential Construction

Abstract : The construction boom in Saudi Arabia is not only having a profound impact on the local economy, but also providing a wealth of opportunities for international construction and investors. With the gradual implementation of Saudi Vision 2030 and ongoing economic reforms, the Saudi construction market is expected to continue to grow strongly in the coming years, injecting new energy and momentum into the global construction community.

According to Knight Frank's latest analysis, Saudi Arabia's construction industry is booming, covering a wide range of sectors such as residential, infrastructure, industrial, energy and utilities, and commercial, with its construction value reaching US$141.5 billion.

The construction value of Saudi Arabia's various sectors is expected to grow further to $181.5 billion by the end of 2028, which will make Saudi Arabia one of the largest construction markets in the world. The country plans to build 660,000 new homes by 2030 against the backdrop of a booming construction sector in Saudi Arabia.

Since the launch of the National Transformation Plan in 2016, Saudi Arabia's total budget on real estate and infrastructure projects has exceeded $1.25 trillion. This has been driven by Saudi Arabia's Vision 2030, which aims to build more than 660,000 new homes by 2030, 320,000 hotel rooms, 5.3 million square meters of retail space and 6.1 million square meters of new office space.

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According to Knight Frank, about 38% of the current existing contracts in the Saudi construction industry are concentrated in Riyadh, with the total contract value reaching about $54 billion, followed by Mecca and Tabuk with $28.7 billion and $28.5 billion, respectively.

The residential sector dominates the Saudi construction industry, with its value reaching $43.5 billion in 2023, or 31% of the total. This is expected to grow to $56.9 billion by 2028. This is followed by the energy and utilities sector, which totaled $35.1 billion in 2023 and is expected to grow to $46.5 billion by 2028.

The development of the construction market in Saudi Arabia is not only supported by internal economic policies, but also by the interest of international investors. The development of highways, metro systems and residential projects in major cities such as Riyadh is driving the diversification and urbanization of the Saudi economy. These projects not only increase employment opportunities, but also improve the quality of life of local residents and modernize urban infrastructure.

It is worth noting that the construction industry in Saudi Arabia is not limited to infrastructure and housing construction alone. With the diversification and digital transformation of the energy market, Saudi Arabia is also actively promoting innovative projects in the energy and utility sectors to support its competitiveness and leadership in the global energy market.