In Q4 2022, the value of awarded contracts in Saudi Arabia skyrocketed to $19.1bn (SAR 71.5bn), representing 37% of the total awards for the year.

According to a report by the US-Saudi Business Council, the Saudi Arabian construction sector experienced significant growth last year, with the value of awarded contracts returning to pre-pandemic levels.

The report reveals that the total value of awarded contracts in 2022 was SAR 192.4bn ($51.3bn). The real estate sector accounted for the largest share of construction spending, while NEOM was the region that received the highest investment.

There was a 35% increase in the value of awarded contracts last year as compared to the previous year.

The report shows that during the final three months of last year, the value of awarded contracts in Saudi Arabia skyrocketed to SR71.5bn ($19.1bn), representing 37% of the total awards for the year. This surge marked the highest value of awarded contracts in a quarter in nearly seven years, with the last highest value of SAR88.1bn ($23.6bn) being recorded in the first quarter of 2015.

During Q4 of 2022, the real estate sector received SR38.9bn ($10.4bn) from 33 contracts, making it the highest-grossing sector by quarter in 2022.

The surge in the real estate sector was primarily driven by the residential real estate market, which experienced a quarter-on-quarter growth of SR25.3bn ($6.7bn), representing a 637% increase, and a year-on-year growth of SR27.6bn ($7.4bn), or a staggering 1,721% increase.

This was the highest tally by quarter for the residential real estate market since Q1 2015 when it reached SR33.2bn ($8.9bn).

Overall, the real estate sector in Saudi Arabia grew by SR26.4bn ($7bn). For the year, the real estate sector achieved the highest tally in awarded contracts with SR63.1bn ($16.8bn), which was SR42.2bn ($11.3bn) or 202 per cent greater than 2021.

The real estate sector accounted for 33 percent of the total value of awarded contracts during 2022.

SAUDI ARABIA: NEOM WINS MAJORITY OF CONTRACTS VALUED AT $6.9BN

The Tabuk region attracted the highest tally of awarded contracts, receiving SR27.4bn ($7.3bn), which accounts for 38% of the total. NEOM was responsible for a majority of the contracts, awarding SR25.7bn ($6.9bn), or 94% of all contracts during the quarter. NEOM’s contract awards were primarily in the real estate and transportation sectors. The remaining contracts worth SR1.8bn ($468mn), or 6%, were awarded by Red Sea Global, SEVEN, and Tabuk Municipality in the real estate and transportation sectors.

The Riyadh region captured the second-highest value of awarded contracts, totaling SR13.8bn ($3.7bn) or 19% of the total. The real estate sector accounted for the highest share of Riyadh’s contracts with SR8.7bn ($2.3bn), or 63% of the total. The transportation sector was responsible for the second-largest share of Riyadh’s awarded contracts with SR1.6bn ($438m), or 12%. The remaining 25% of the awarded contracts came from the healthcare, industrial, power, water, oil, and gas sectors.

The Makkah region rounded out the top three regions by awarded contracts with SR12.7bn ($3.4bn), or 18% of the total. The power sector’s two contract awards accounted for SR9.8bn ($2.6bn), or 77% of the total.

Albara’a Alwazir, Director of Economic Research at the US-Saudi Business Council, said: “The surge in contract awards continues unabated on the back of a growing economy that was fuelled by significant oil revenues and the acceleration of giga-projects following the COVID-19 slowdown.”

He also stated that the private sector’s increasing contribution to Saudi Arabia’s diversification strategy is aiding in the rebound of the construction sector to pre-pandemic periods.

 

Ref: Construction Week Middle East