Saudi Arabia Economy: Vision 2030 and the Booming Construction Sector

The ambitious Vision 2030 initiative of the Saudi Arabian government aims to transform the nation's economy by strengthening employment, attracting foreign investment, and improving the living standards of Saudi citizens.

Saudi Vision 2030

In recent years, Saudi Arabia has embarked on a transformative journey through Vision 2030, a comprehensive plan to reshape its economy and society. The construction sector has become a vital industry experiencing significant growth under this vision, supporting infrastructure development, urbanization, and tourism as part of this ambitious initiative. Vision 2030 facilitates a substantial transformation in Saudi Arabia's construction industry, revolutionizing urban landscapes, creating job opportunities, and promoting economic diversification.

A Blueprint for Change: Vision 2030

Launched in 2016, Vision 2030 is a far-reaching strategy aimed at diversifying Saudi Arabia's economy and reducing its reliance on oil revenues. Spearheaded by Crown Prince Mohammed bin Salman, this vision endeavors to enhance several vital sectors, elevate the quality of life, and position the kingdom as a formidable global investment hub.

The Vital Role of the Construction Sector

The construction sector assumes a pivotal role in achieving the objectives of Vision 2030. As the Saudi Arabian government focuses on developing mega-cities, enhancing infrastructure, and fostering tourism, the construction industry becomes the driving force behind these initiatives, fueling economic growth and innovation.

Significant investments by Saudi Arabia have already been made in developing ports, railroads, highways, and airports. The intention is to collaborate with the private sector and establish new international partnerships to fortify, improve, and connect the infrastructure within and beyond international borders for maximum benefit. The aim is to optimize "hard" infrastructure with more efficient systems, such as stringent governance, streamlined procedures, and an effective customs system. Specific changes are proposed to enhance and enforce existing rules and regulations, calling upon transport companies, including air and sea operators, to maximize their capabilities by establishing reliable connections between current trade centers and creating new trade routes.

Job Creation and Economic Growth

Expanding the construction sector has led to numerous job opportunities for Saudi citizens. With an emphasis on local employment, Vision 2030 reduces unemployment rates and enhances the workforce's skill set, laying the foundation for a prosperous future.

The exponential growth of the construction industry significantly contributes to the country's GDP. Attracting foreign investments and fostering domestic projects fosters economic diversification and ensures a sustainable revenue stream beyond oil.

Sustainability and Innovation

Vision 2030 prioritizes sustainability in development. In response, the construction sector is adopting eco-friendly practices, green materials, and energy-efficient technologies, aligning with global efforts to combat climate change.

Integrating advanced technologies such as Building Information Modeling (BIM), 3D printing, and intelligent construction methods enhances project efficiency and quality. These innovations position Saudi Arabia as a leader in construction practices.

Challenges and Future Prospects

Despite remarkable progress, the construction sector faces challenges linked to regulatory frameworks, permitting processes, and labor regulations. Streamlining these aspects is crucial for sustained growth.

The construction sector is poised to continue playing a pivotal role in Saudi Arabia's economic diversification. As the country prepares to host global events like the G20 Summit and the World Expo, the sector will continue to expand, creating more opportunities and setting new benchmarks for excellence.

Leading Contractors in 2024

• Saudi Binladin Group (SBG)
• Quality Leaders Group
• Haif Contracting
• Almabani General Contractors
• ControlTap Contracting Company
• El Seif Engineering Contracting Company
• AlKifah Contracting Company
• AlBawani
• Saudi Amana Contracting
• Nesma Holding Co Ltd

Vision 2030 and Expansion of Construction Sector in Saudi Arabia: Facts, Figures, and Statistics

• With a GDP of SAR 2.4 trillion, Saudi Arabia boasts the largest economy in the Middle East.
• The construction sector in 2023 is valued at US$65.58 billion and is projected to grow at a CAGR of 2.75% to reach US$75.12 billion in 2028.
• Currently estimated at US$64 billion, the Saudi Arabian construction market is expected to expand at a CAGR of 5.8% during the forecast period from 2019 to 2028.
• Investment in housing projects and the government's goal to increase homeownership from 62% in 2020 to 70% by 2030 supports anticipated growth in the residential sector.
• The GDP from Construction in Saudi Arabia rose to SAR 30,864 million in the first quarter of 2023 from SAR 30,735 million in the last quarter of 2022.
• The number of buildings constructed in the Kingdom increased by 3.2% in 2022.
• Saudi Arabia has maintained its position as the most vital market in the MENA region for four consecutive years, securing the highest number of project awards in value.
• As of October 2022, Saudi Arabia possessed a 35% market share and secured contracts worth US$31 billion, compared to US$87 billion for the entire MENA region.
• The pipeline value of unawarded (pre-execution) projects in Saudi Arabia is estimated at USD 1.1 trillion.
• Approximately 70% of projects fall under the 'construction' sector, with residential, cultural, leisure, and hospitality projects taking the lead within the framework of the Vision 2030 strategy.
• The kingdom's top ten contractors oversee projects valued at US$400 billion, constituting 40% of the total future pipeline value of US$1.1 trillion.
• According to MEED Projects, the total value of projects awarded in Saudi Arabia between 2021 and 2025 is projected to reach US$569 billion, with a total of US$85 billion (15%) awarded from January 2021 to October 2022.
• The rate of hotel construction in the Middle Eastern kingdom is expected to rise in 2023, with nearly 50% of the 167 projects slated for completion within the year.
• 35,884 out of 63,753 hotel rooms in Saudi Arabia are expected to become available in 2023, a substantial increase from the 9,207 keys from this year's 24 projects.
• By the end of 2022, more than 4,700 construction projects were active in Saudi Arabia, with a cumulative estimated value of US$852.3 billion.
• The government aims to boost renewable energy capacity from 4.9GW in 2021 to 27.3GW by 2023 and 58.7GW by 2030 under the Saudi Vision 2030.
• In the 2023 budget, particular attention was given to the construction of 71 modern schools and educational complexes in Jeddah featuring 1,634 classrooms with a capacity of 50,000 students.
• The development will span 26,500 square kilometers and is slated for completion in 2025.
• NEOM is estimated to be worth US$500 billion upon completion, serving as a business and tech center poised to contribute US$48 billion to the kingdom's gross domestic product and create 380,000 jobs.
• NEOM is designed to preserve 95% of the natural environment and operate entirely on renewable energy.
• Qiddiya, The New Entertainment City, scheduled for completion in 2035, will span an area of 334km.
• Qiddiya City will generate over 57,000 jobs for residents and expatriates by 2030.
• The hotels in Qiddiya are projected to accommodate over two million people, while the project's commercial sector is anticipated to benefit 12 million individuals.
• Qiddiya is projected to contribute up to SAR 17 billion of GDP to the economy.

Final Word

In conclusion, Vision 2030 acts as a catalyst for the expansion of Saudi Arabia's construction sector. By envisioning mega-projects, fostering job creation, promoting sustainability, and embracing technological innovation, the construction industry is emerging as a pivotal force propelling the kingdom's transformation. As the nation strides towards 2030, the growth of the construction sector will not only shape urban landscapes but also redefine the economic and social fabric of Saudi Arabia.