The public and private investment in the construction industry will drive the infrastructure boom in Saudi Arabia

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Around the Kingdom, construction activities are going in full swing, with several major infrastructure projects announced in 2022. Driven by Vision 2030, the booming infrastructure construction market in Saudi Arabia is experiencing a strong inflow of investment from both the public and private sectors. In Q3 2022, the Saudi Arabian government announced several infrastructure projects and major investments in the domestic construction industry. For instance,

• In September 2022, the Ministry of Municipal and Rural Affairs and Housing in Saudi Arabia entered into an agreement with the National Housing Company. Notably, the agreement, worth US$10.6 billion, aims to develop the infrastructure of the eleven cities around Saudi Arabia. Under the agreement, more than 150,000 housing units will be constructed across eleven cities in the Kingdom. An area of over 90 million square meters has been allocated for housing construction. Furthermore, approximately 54 million square meters of space is allocated for the construction of public facilities, road networks, green and open spaces, and public transport.

Notably, the National Housing Company, in strategic collaboration with developers will invest a total of US$10.6 billion or SAR 40 billion towards the construction activities of these infrastructure projects. Being one of the leading players in the real estate development sector, the National Housing Company aims to raise the proportion of housing ownership for families to 70% in Saudi Arabia by 2030.

As part of its Vision 2030 program, the Ministry of Finance also entered into an agreement with several banks, securing US$6.66 billion, or SAR 25 billion, to fund the construction activities of various infrastructure projects in the Kingdom. These infrastructure projects are slated to commence construction activities in 2023 and 2024. The investment towards the development of port infrastructure is also projected to increase from the short to medium-term perspective. For instance,

• In September 2022, Mawani, the Saudi Ports Authority, announced that it has entered into seven contracts and MOUs, which are worth more than US$240 million or SAR 900 million. Notably, these MOUs were signed with both the private and public sectors. The agreement includes the establishment of an integrated logistics park at Jeddah Islamic Port, among other projects.

Notably, Saudi Arabia has also experienced a strong inflow of investment from private players in the logistics infrastructure construction project. For instance,

• In November 2022, Agility, an infrastructure development firm, announced an investment of US$163 million towards the construction of a large logistics park near Jeddah. Notably, the infrastructure construction project is part of the land-concession agreement announced by SPGA (State Properties General Administration) in Saudi Arabia.
• The construction activities of the logistics part are expected to commence in Q1 2023 and are projected to be completed for operations by Q1 2025. Under the agreement, Agility is investing US$163 million, or SAR 611 million to build the park and will have the right to operate the park for 25 years.

The investment from Agility comes days after Saudi Arabia announced its plans to transform the Kingdom into a global logistics center. This is also part of the Vision 2030 strategy. Notably, under the Global Supply Chain Resilience Initiative, the Kingdom is looking to attract an investment of US$11 billion over the first two years. Along with the logistics infrastructure, the Kingdom is also focusing on the construction of utility infrastructure in Saudi Arabia. For instance,

• In June 2022, the Kingdom announced its plans to launch 93 projects, worth US$2.26 billion or SAR 8.5 billion, many of which are linked to the utility infrastructure development in the country. Notably, these infrastructure development projects are aimed at improving the water, agriculture, and environmental system in the region.

All of these infrastructure construction projects announced by the Kingdom are expected to drive increased public and private sector investment in the market from the short to medium-term perspective. Furthermore, ConsTrack360 expects the ongoing boom in the infrastructure market in Saudi Arabia to further continue over the next three to four years. Notably, the investment in these infrastructure projects, along with the investment in the giga infrastructure projects, such as the NEOM project, will keep driving the growth of the construction market in Saudi Arabia from the long-term perspective.

To know more and gain a deeper understanding of the construction industry in Saudi Arabia, click here.