Being the largest exporter of oil in the world, the Saudi economy is constantly on the rise. It has the largest economy amongst all GCC countries and is leading investments in the construction sector. The total value of projects planned or underway is estimated to be around USD 700 billion and is projected to reach USD XX billion by 2021 at a CAGR of X%. Greater exposure to trade, attractive investment environment, competition, and diversification are factors affecting the growth of this market.
Huge government investments and an increase in demand for residential constructions are driving the sector. In order to boost the religious tourism in the country, the Saudi Arabia government increased their budget allocations towards transport, infrastructure, hospitality, and retail, resulting in an increase in construction activities in these sectors.
Restraints and Challenges
To gain a presence in the market a significant amount of money and time is needed, as setting up a project in Saudi Arabia is tougher for overseas firms. Investors fear the high-security risk and added cost of insurance. The labor in Saudi Arabia which works in the construction sector is generally from India, Bangladesh, Pakistan and other countries of the Indian subcontinent. They are generally unskilled and take a lot of time to adapt. To prevent slowing down of projects more workers are employed resulting in increased wage bills for companies.
The construction sector shows potential with an increase in private investments providing more opportunities for foreign companies to expand their involvement in the Kingdom. Other gulf countries have already reached stagnation in the construction sector, thereby improving Saudi Arabia’s prospects.
Key Deliverables in the Study