The Saudi Arabian government's comprehensive plan, known as Vision 2030, aims to revamp the economy of the nation. The objective is to increase employment, draw in foreign investment, and improve the standard of living for Saudi nationals.
In recent years, Saudi Arabia has embarked on an ambitious journey to transform its economy and society through its Vision 2030 initiative. One of the key sectors that has witnessed significant growth and expansion under this vision is the construction sector. The construction industry is being expanded to support infrastructure development, urbanization, and tourism as part of this ambition. The Saudi Arabian building sector is in a really interesting phase right now. This article delves into how Vision 2030 has played a pivotal role in the expansion of the construction industry in Saudi Arabia, revolutionizing urban landscapes, creating job opportunities, and fostering economic diversification.
A Vision for Transformation: Vision 2030
Redefining Saudi Arabia's Future
Vision 2030, launched in 2016, is a comprehensive blueprint that aims to diversify Saudi Arabia's economy and reduce its dependence on oil revenues. Spearheaded by Crown Prince Mohammed bin Salman, the vision seeks to develop key sectors, enhance quality of life, and position the kingdom as a global investment powerhouse.
The Role of the Construction Sector
The construction sector emerges as a linchpin in achieving the goals of Vision 2030. As the Saudi Arabian government focuses on developing mega-cities, improving infrastructure, and fostering tourism, the construction industry becomes the backbone of these initiatives, driving economic growth and innovation.
Building a Regional Logistic Hub
Saudi Arabia has already made significant investments in the development of ports, railroads, highways, and airports. They intend to collaborate with the private sector and form a new set of international partnerships to finish, enhance, and connect the infrastructure both within and beyond international boundaries in order to fully benefit from these investments. With systems that can generate higher performance, such as more stringent governance, fewer procedures, and an effective customs system, the goal is to unlock the "hard" infrastructure. To enhance and implement current rules and regulations, some modifications are being proposed. Transport companies, including those that operate by air, sea, and other means, will be urged to maximize their capabilities by establishing reliable connections between current trade centres and establishing new trade routes.
Transforming Urban Landscapes: Mega-City Projects
NEOM: A City of the Future
NEOM, a futuristic mega-city, epitomizes Saudi Arabia's dedication to innovative urban development. With cutting-edge technology, sustainability, and advanced infrastructure at its core, NEOM is set to attract global investments and talent, thereby creating a thriving ecosystem of innovation.
Qiddiya: Where Entertainment Meets Excellence
Qiddiya is another remarkable project aimed at diversifying the economy. Designed as an entertainment and leisure destination, it not only offers recreational facilities but also stimulates the growth of the construction sector through its ambitious development plans.
Job Creation and Economic Growth
Empowering the Workforce
The expansion of the construction sector has translated into numerous job opportunities for Saudi citizens. With the emphasis on localized employment, Vision 2030 is reducing unemployment rates and enhancing the skill set of the workforce, setting the stage for a prosperous future.
The construction industry's exponential growth contributes significantly to the country's GDP. By attracting foreign investments and fostering domestic projects, it boosts economic diversification and ensures a sustainable revenue stream beyond oil.
Sustainability and Innovation
Green Initiatives in Construction
Vision 2030 places sustainability at the heart of development. The construction sector responds by adopting eco-friendly practices, green materials, and energy-efficient technologies, aligning with global efforts to combat climate change.
The integration of advanced technologies such as Building Information Modeling (BIM), 3D printing, and smart construction methods enhances the efficiency and quality of projects. These innovations position Saudi Arabia as a leader in construction practices.
Challenges and Future Prospects
Addressing Regulatory Challenges
Despite the remarkable progress, the construction sector faces challenges related to regulatory frameworks, permitting processes, and labor regulations. Streamlining these aspects is crucial for sustaining growth.
Future of Construction
Looking ahead, the construction sector is poised to play 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 2023
- Mofarreh M Al Harbi Est
- Larsen & Toubro Ltd
- Webuild SpA
- Almabani General Contractors
- Siemens AG, Vinci SA
- Senaat General Holding Corp
- National Marine Dredging Co
- Nesma Holding Co Ltd
- Al-Dar Al-Arabia Co
Leading Consultants in the Construction Sector in 2023
- SNC-Lavalin Group Inc
- Buro Happold Ltd
- D.G Jones & Partners
- Dar Al-Handasah Consultants Shair and Partners Holdings Ltd
- Worley Ltd
- Khatib & Alami Holding
- Egis Group
- WSP Global Inc.
- KBR Inc. SNC-Lavalin Group Inc
Vision 2030 and Expansion of Construction Sector in Saudi Arabia: Facts, Figures and Statistics
- With a GDP of SAR 2.4 trillion, Saudi Arabia is the largest economy in Middle East.
- The construction sector in 2023 is worth US$65.58 billion, expected to increase by a CAGR of 2.75% to US$75.12 billion in 2028,
- The Saudi Arabian construction market is currently pegged at the value of US$64 billion and is expected to grow at a CAGR of 5.8% during the forecast period of 2019-2028.
- Forecast-period growth in the residential sector is expected to be supported by investments in developing housing projects, coupled with the government’s target to increase home ownership from 62% in 2020 to 70% by 2030.
- GDP from Construction in Saudi Arabia increased to SAR 30,864 Million in the first quarter of 2023 from SAR 30,735 Million in the fourth quarter of 2022.
- In 2022, the number of buildings built in the Kingdom increased by 3.2%.
- Saudi Arabia has been the strongest market in the MENA region for the past 4 years in a row, with the most project awards worth the most overall.
- As of October 2022, Saudi Arabia had a 35% share of the market and has won contracts worth US$31 billion, compared to US$87 billion for all of MENA.
- Saudi Arabia’s pipeline value of unawarded (pre-execution) projects is estimated at USD 1.1 trillion.
- Approximately 70% projects comprise ‘construction’ sector projects, with residential, cultural, leisure, and hospitality as sub-sector leaders, which is the driving force behind the Vision 2030 strategy.
- The top ten contractors in the kingdom are responsible for US$400 billion in projects that are currently in the execution stage, accounting for 40% of the total future pipeline value of US$1.1 trillion.
- According to MEED Projects, the total value of projects awarded in Saudi Arabia between 2021 and 2025 is expected to reach US$ 569 billion, with a total of US$85 billion (15%) awarded to date across 2021 January and 2022 October.
- The Middle Eastern kingdom’s hotel construction rate is due to increase in 2023, with nearly 50% of the 167 projects due for delivery within those 12 months.
- Altogether, 56% (35,884) of the 63,753 Saudi Arabian rooms will come online in 2023, a significant increase from the 9,207 keys from this year’s 24 projects.
- Saudi Arabia had more than 4,700 construction projects that were active by the end of 2022, with a combined estimated value of US$852.3 billion.
- The government aims to increase the renewable energy capacity from 4.9GW in 2021 to 27.3GW by 2023 and 58.7GW by 2030 under the Saudi Vision 2030.
- The 2023 Budget paid emphasis on the construction of 71 modern schools and educational complexes with 1,634 classrooms with a capacity of 50,000 students in Jeddah.
- The development will be spread across 26,500 square kilometers and is estimated to complete in 2025.
- NEOM is estimated to worth US$500 billion to complete. a business and tech centre, expected to contribute US$48 billion to the kingdom's gross domestic product and create 380,000 jobs.
- NEOM will preserve 95% of the natural environment, and be based on 100% renewable energy.
- Qiddiya, The New Entertainment City, planned for completion in 2035, is going to stretch over an area of 334km.
- Qiddiya City is expected to create more than 57,000 jobs for the residents and expatriates by 2030.
- Over two million people are expected to be accommodated in the hotels in Qiddiya while 12 million people will benefit from the project’s commercial sector.
- Qiddiya is expected to contribute up to SAR 17 billion of GDP to the economy.
In conclusion, Vision 2030 serves as a catalyst for the expansion of the construction sector in Saudi Arabia. By envisioning mega-projects, fostering job creation, promoting sustainability, and embracing technological innovation, the construction industry is becoming a driving force behind the kingdom's transformation. As the nation progresses towards 2030, the construction sector's growth will not only shape the urban landscapes but also redefine the economic and social fabric of Saudi Arabia.
Frequently Asked Questions (FAQs)
Q1: What is Vision 2030?
A: Vision 2030 is an initiative by the Saudi Arabian government to diversify the economy, reduce reliance on oil, and transform various sectors for sustainable growth.
Q2: How does the construction sector contribute to Vision 2030?
A: The construction sector plays a vital role in Vision 2030 by driving urban development, creating job opportunities, and contributing to economic diversification.
Q3: What are some key mega-city projects under Vision 2030?
A: NEOM and Qiddiya are notable mega-city projects that showcase innovative urban planning and economic diversification efforts.
Q4: How does the construction sector prioritize sustainability?
A: The construction sector adopts sustainable practices by using green materials, energy-efficient technologies, and eco-friendly construction methods.
Q5: What challenges does the construction sector face?
A: Regulatory hurdles, labor regulations, and permitting processes pose challenges to the growth of the construction sector, which need to be addressed for sustained development.