The oil-rich kingdom is undergoing significant transformations in its built environment as it aims to meet the goals of its Vision 2030 plan and grow its population to 10 million by the end of the decade
Frank Knight projected that total construction output value in Saudi Arabia will reach $181.5 billion by the end of 2028, making the kingdom the largest construction market in the world. This comes as Riyadh aims to overhaul and diversify its economy and reduce its dependence on oil under its ambitious Vision 2030 project.
In 2023, the output value for the Saudi construction sector reached $141.5 billion, the global property consultancy revealed in its ‘’Construction Landscape Review – H1 2024’ report. The residential sector had the biggest share of the output value, with 31% ($43.5bn) of the total output value in 2023 and is forecast to increase to $56.9 billion by 2028.
The energy and utilities sector came in second place accounting for $35.1bn in 2023. Knight Frank’s analysis projected that this sector’s value will reach $46.5bn by 2028.
“We are currently witnessing a historical transformation unfolding in Saudi Arabia with construction projects standing out in their design scale and value” Mohamed Nabil, regional partner and head of project and development services for the Middle East and North Africa (MENA) at Knight Frank stated.
He noted that Riyad Province, gained the lion’s share of the construction contracts awarded in 2023. The capital city currently accounts for 38% of contract award value, equating to $54bn. Makkah and Tabuk Provinces are next with $28.7bn and $28.5bn, respectively.
Since 2016, when Saudi Arabia’s National Transformation Plan (an economic action plan put in place by the government as part of its Vision 2030) was launched, the total budgeted value of real estate and infrastructure projects has surpassed $ 1.25 trillion, Frank Knight said.
The ongoing urban transformation reflects the kingdom’s aim to deliver over 660,000 residential units, more than 6 million sqm of new office space, over 5.3 million square metres (sqm) of retail space and an additional 320,000 hotel rooms by 2030, the report added.
The Saudi government is planning to draw investments and financial flows exceeding $3 trillion by the end of the decade, Saudi Minister of Investment Khalid Al-Falih underscored during the inaugural Sino-Gulf Cooperation for Industries and Investments Forum in China last month.
Saudi Arabia is the Arab world’s biggest economy. Its Vision 2030 has three main pillars: to make the country the “heart of the Arab and Islamic worlds”, to become a global investment powerhouse, and to transform the country’s location into a hub connecting Afro-Eurasia. Vision 2030 project was welcomed by many economists who say the diversification plan, even if only partially implemented, could wean Riyadh off its reliance on oil and gas.
By far, Vision 2030’s most visible impact has been the emergence of huge “giga projects” across the kingdom, including NEOM, an area in the northwest of the kingdom it is hoped will become a regional hub for investment, industry, and tourism.
There are currently 25 “giga projects” that are at various phases of construction according to Knight Frank analysis. Amidst the various projects, many world-renowned firms are working on these projects at many different scales, transforming the kingdom’s fabric. Riyadh, is leading the transformation by hosting the 2030 World Expo. The country is also expected to host the World Cup in 2034.
