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According to ConsTrack360, the construction industry in the Kingdom of Saudi Arabia is expected to grow 18.9% in 2021. The industry is expected to continue its growth 8.9% in 2022. Increased spending and focus by the government on infrastructure and commercial projects are some key factors likely to support upward trajectory of the industry from the short to mid-term perspective.
The effort of the government to diversify the economy away from oil and to become a global tourist destination is also expected to boost the growth of the commercial construction industry in Saudi Arabia. With the country opening up again to the hospitality and leisure market, there has been an increase in the number of rooms being built in Saudi Arabia. Moreover, as traveling conditions improve across the globe, ConsTrack360 expects growth to return in the hospitality sector. Therefore, it is expected that international hoteliers will invest in the construction and development of new facilities in Saudi Arabia.
Tourism activities are expected to increase in the coming years. As a result, more than 200 projects consisting of 69,000 rooms are currently under development in Saudi Arabia. In November 2020, the crown Prince also announced that the Public Investment Fund (PIF) will inject US$40 million into the Saudi Arabia economy in 2021 and 2022.
The Saudi government also expanded the role of the PIF. The fund is now able to finance the various commercial construction projects in the country. As a result, the PIF is backing the flagship megaprojects of the crown Prince in Saudi Arabia. These include the tourism project at the Red Sea, the entertainment hub at Qiddiya, and the US$500 billion Neom economic zone. This supported by foreign direct investment will boost the growth of the commercial construction industry in the Kingdom.
Under construction mega projects are expected to support the growth
Qiddiya, the capital of entertainment in Saudi Arabia, will include more than 300 educational and recreational facilities along with a Formula One racetrack and a 20,000-seat stadium. The first phase of the US$8 billion project, is expected to open in 2023.
Jabal Omar is another mega project currently under development phase in Saudi Arabia. Spanned over an area of 40 hectares, it is one of the largest construction projects that will cost around US$4.4 billion. The commercial project which is divided into eight phases of construction will include seven-star facilities, several hotels, and dedicated prayer areas for guests arriving in the Kingdom.
Ad Diriyah is another large construction project that is being built on the outskirts of Riyadh. Expected to become one of the major tourist destinations once it comes to life, Al Diriyah will include the construction of several luxury resorts from international hotel brands. The project is expected to cost US$17 billion will also include more than 100 entertainment and dining options.
Giga-projects at Al Widyan, known as the city within the city, will also support the growth of the commercial construction sector in Saudi Arabia. Covering an area of 7 million square meters, these projects involves an overall development of cost of US$2.7 billion. From educational facilities to spaces for retail, leisure, entertainment, and offices – the mega project is aiming to target entrepreneurs in the country.
Additionally, Al Widyan will also be the home to the largest entertainment and shopping destination in the world. The major shopping center which is expected to cost US$5 billion will include recreational facilities, dining options, theme parks, and water parks among other things.
Launched in 2019, the King Salman Park mega construction project will include construction activities for open-air theatre, museums, entertainment games area, hotels, and food and retail area among other things.
Construction activities of these mega projects along with other projects such as Neom and Red Sea projects are expected to boost the commercial construction market in 2021. Investment in these substantial commercial infrastructure projects is further supporting the crown Prince Vision 2030. The construction projects are the foundation on which Saudi Arabia is envisioning the future. Therefore, the outlook for the commercial construction market remains upbeat from the short to mid-term perspective.
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