Experts confident of Saudi construction sector returning to normal soon

JEDDAH: The total value of construction contracts awarded in Saudi Arabia during the third quarter (Q3) of this year collapsed by 84 percent on figures for the same period in 2019 as the economic impact of the coronavirus disease (COVID-19) pandemic continued to bite.

Despite the large drop, industry experts remained upbeat, pointing out that the Q3 figure was a statistical anomaly, as 2019 was a record year, and predicting that once the short-term impact of the global health crisis had passed the construction sector would bounce back.

According to the latest Contract Awards Index (CAI) produced by the US-Saudi Business Council (USSBC), the total value of construction contracts awarded in the Kingdom during July, August, and September declined by SR40.4 billion ($10.8 billion) to SR7.4 billion.

Within the quarter itself, the figure also gradually declined, going from SR2.958 billion in July to SR2.613 billion in August, and SR1,842 billion in September. One of the main reasons for the slump was budgetary constraints, as the Ministry of Finance looked to absorb the economic impact of the pandemic and reined in capital expenditure.

Looking back on the year as a whole, the data compiled by the USSBC found that during the first three quarters of 2019 construction contracts worth a total of SR161.8 billion were handed out. By comparison, during the same period this year the figure fell to SR63.6 billion, a drop of 60.69 percent.

Albara’a Alwazir, economist and author of the USSBC report, told Arab News that he was confident the sector would rebound, just as it had done after the downturn between 2016 and 2018.

“The Kingdom was pursuing a market share leadership strategy as an oil producer in 2016 whereby oil prices decreased as a result of high global oil inventories.

The slowdown in global demand for oil led to the reduction in the Kingdom’s budgetary spending, with a particular slowdown in capital expenditures,” he said.

He pointed out that the current downturn was somewhat similar in that lower oil revenues necessitated a revaluation of the Kingdom’s expenditures in the face of reduced global oil demand, but the long-term impact would be minimal, as the sector returned to normal after the COVID-19 slowdown. 

“The Saudi economic outlook appears promising as the number of COVID-19 cases have sharply decreased coupled with the recent news that vaccines are showing promising results and are reported to be available by the middle of 2021.

“Furthermore, while numerous projects have been delayed because of the pandemic, the government has stated that there will be a continued focus on megaprojects especially those that relate to Vision 2030,” he added.

Alwazir was also optimistic that decisive government actions would also mean the long-term impact had been reduced. “The recent announcement that the Public Investment Fund (PIF) will inject SR150 billion annually into the economy in 2021 and 2022 is a positive development.

“The PIF’s role in keeping the economy buoyant in the face of a global downturn will be pivotal in progressing through Vision 2030’s mandates,” he said.

Taimur Khan, an associate partner at real estate consultancy Knight Frank, noted that the dramatic year-on-year drop in Q3 was mainly down to statistics and the fact that the figures were being compared to a record-breaking 2019.

“It is important to note that the total value of contracts awarded in 2019 was the highest level since 2015 and 95.4 percent higher than total awards in 2018, so we are comparing against a high base,” he said.

“Whilst the total value of new contracts has decreased, the level of activity underway in Saudi Arabia still remains high compared to previous years and considering new financing agreements signed during the course of 2020, particularly those relating to urban and real estate development, we expect new contracts activity levels to begin to return to pre-pandemic highs in 2021,” he added.

Figures in the USSBC report revealed that the majority of the awarded contracts during Q3 were in the transportation, power, and real estate sectors, which jointly accounted for 59 percent of the total. The transportation sector registered the highest value of contract awards with SR1.7 billion to three major road development projects linked to the Red Sea Development, Qiddiya, and Amaala megaprojects.

The largest Q3 contract was for SR938 million, awarded by the Red Sea Development Co. to Almabani, and Nesma and Partners for the construction of a 3.7-km runway and taxiways at the Red Sea International Airport. In terms of geography, the Eastern Province continued to be the focus for activity, accounting for SR2.3 billion worth of deals, or 32 percent of all contracts awarded, including a new chlorine derivatives plant and an industrial wastewater processing plant in Jubail.

Makkah Province accounted for 20 percent of contracts, primarily in the power and real estate sectors, followed by Tabuk province with 19 percent.

According to Alwazir, the Saudi Contractors Authority has maintained that the government’s megaprojects related to Vision 2030 would continue to be its focal point in the near-term, with investments continuing into these strategically important areas.


Saudi Arabia completes construction of Expo 2020 Dubai pavilion

Saudi Arabia has announced the completion of the construction of its pavilion at Expo 2020 Dubai, which will now take place in 2021 due to a coronavirus-related postponement.

The pavilion, work on which began in February 2019, will be second in size only to that of the UAE pavilion.

Spanning an area of 13,069 sq m – equivalent to two football fields, the pavilion will celebrate the country’s experience in blending its traditions with its aspirations for a bright future, Saudi Press Agency reported.

The eco-friendly structure boasts 650 solar panels sourced from Saudi entrepreneurs and manufactured in the kingdom.

The Saudi Arabia Pavilion will take visitors on a guided tour of the wonders of the country’s 13 regions through multiple immersive and interactive experiences and exhibits.

A special water feature installation is set to be a key attraction alongside a 1,320 sq m inclined mirror screen and unique art showcases attributed to Saudi artists while an art installation embedded with 2,030 crystals to represent Saudi Vision 2030 is also anticipated to be a big draw.

“Rising six stories from the ground, the innovative facade of the building symbolizes the country’s deeply-rooted heritage, ancient culture, natural wonders, myriad opportunities and the towering ambition of the Saudi people,” a statement said.

Last week, a senior Expo 2020 Dubai executive said projected visitor numbers to next year’s delayed event remain the same, despite heightened health and safety regulations as a result of the global Covid-19 pandemic.

It had been feared that the audience for the event, which was initially forecast to attract in the region of 25 million visits over its six-month duration, would be scaled down because of social distancing restrictions designed to curb the spread of the virus.

However, Manal AlBayat, chief sales & marcomms officer at Expo 2020 Dubai, told Arabian Business the targets for visitor numbers remained the same.

Despite the ongoing Covid-inspired health and economic crisis, AlBayat revealed that the construction of all Expo-related assets, including the iconic Al Wasl Plaza and associated pavilions, is expected to be completed by the end of the year.

More than 190 countries have signed up to take part in the six-month World Expo.

Saudi giga project says construction contracts top SR2bn

A major contract worth SR1.1 billion ($293 million) has been awarded to build roads and bridges connecting the Qiddiya giga project in Saudi Arabia as construction progresses despite the impact of coronavirus.

The total value of all construction contracts awarded so far by Qiddiya Investment Company (QIC) since construction began some 12 months ago, has reached SR2 billion, with these contracts awarded 100 percent to Saudi companies.

The most recent contract award, a three-year agreement to construct major roads and bridges on the upper plateau of the site, was won by Haif & Freyssinet – a joint venture contract between the two local firms.

Kareem Shamma, chief development officer, QIC, said: “Reaching the SR2 billion mark is a very important milestone for us, but what’s more important is that these contracts went through a tough and competitive bid process, and were won by Saudi firms, and this, wholeheartedly, supports our intention to contribute to the growth of the domestic economy.

“It is also indicative of our continued commitment to creating the kingdom’s capital of Entertainment, Sports and the Arts. Businesses across the globe have been affected adversely due to the global pandemic but we have been steadfast in our vision, and fortunate to have the continued and unwavering support from our leadership to stay on track, deliver on time and keep moving forward.”

Owned by the Public Investment Fund (PIF), QIC aims to prioritize business opportunities for local companies in order to catalyze economic and inclusive growth, he added.

The $10 billion Qiddiya will be spread across 334 sq km in Riyadh. In phase one alone, there are more than 45 projects, where visitors will have access to over 300 recreational and educational facilities including a Formula One-standard racing track, a 20,000-seat cliff-top stadium, an 18,000-seat indoor arena, an aquatic centre and a sports hub, as well as a 2,000-seat performing arts theatre and a cinema.

The development will also be home to Six Flags Qiddiya, an extension of the American theme park and with six themed lands.

During lockdown, he said Qiddiya ensured all necessary safety precautions and protocols were followed and was able to continue with construction as planned.

Work progressed without interruption as much of the current primary infrastructure work can be done at safe distances, adhering to all Ministry of Health guidelines, the company said in a statement.

About 800 workers are currently on-site with the number of construction workers expected to reach 1,000 by the end of 2020.

Qiddiya has successfully completed total road asphalting of over 275,000 cubic metres, and concrete pouring of 80,000 cubic metres. In terms of preliminary eartworks and mass grading, total excavation reached 10.4 million cubic metres, total embankment and filling reached 8.6 million cubic metres, and total clearing and grubbing reached 8.9 million cubic metres.

Qiddiya’s site office complex in the site’s lower plateau has recently been doubled in size to support more staff moving from the corporate offices in Riyadh while a second site office complex on the upper plateau is also now under construction and expected to be completed by end of December.

Qiddiya said it aims to develop more strategic partnerships and to continue with heavy construction well into 2022 – making it ready for the testing and commissioning phase, ahead of its opening in 2023.

Earlier this month, QIC announced the appointment of Walt Disney Company veteran Philippe Gas as its new CEO, effective from November 29.

Gas brings a wealth of experience to the role, moving into the position from a 30-year tenure with The Walt Disney Company, where he most recently served as president and managing director of Walt Disney Attractions Japan & Disneyland International.


The Middle East’s top construction contracts of October 2020

Most sectors are still recovering from the impact of the COVID-19 pandemic, including the construction industry. However, October 2020 bought good times for the region’s built environment, especially for giga projects in the Kingdom of Saudi Arabia.

It was raining contracts in October, some of the projects that stood out with their contract awards were, the 366km2 Qiddiya, AMAALA, MBR Solar Park, Riyadh Airport, Diriyah Gate, among others.

Contractors including SNC-Lavalin’s Atkins, United Engineering Construction Co (UNEC), Galfar Engineering & Contracting, Robt Stone, BESIX, Roadline Company, Hill International, Al Marwan General Contracting Company, Penspen, as well as  ILF Consulting Engineers, secured some of the major contract awards in October 2020.

The Middle East’s top construction contracts of October 2020 were:

1. SNC-Lavalin’s Atkins wins lead design contract for Six Flags Qiddiya
2. PDO awards $1bn worth contracts to NESR subsidiary, Gulf Energy
3. Schindler wins contract to modernise Riyadh Airport
4. ADNOC awards $324m contracts to optimise onshore field operations
5. Oman’s Madayn awards $6.7m infra contract to Roadline Company
6. UAE’s ILF Consulting Engineers wins Jordan petchem PMC contract
7. BESIX, Jan De Nul win $101m contract for Fujairah port expansion
8. Saudi’s AMAALA awards Tamimi Global design-build contract
9. DGDA appoints UNEC as lead contractor for Samhan Heritage hotel
10. Penspen wins engineering contract for Upper Zakhum in Abu Dhabi

Please note that this list is not a ranking.

1SNC-Lavalin’s Atkins wins lead design contract for Six Flags Qiddiya

SNC-Lavalin’s Atkins business has been awarded the lead design consultant services contract for the Six Flags Qiddiya theme park project – located within Saudi Arabia’s 366km2 Qiddiya gigaproject, the under-construction capital of entertainment, sports, and the arts in kingdom – by Qiddiya Investment Company (QIC).

Under the three-year contract, Atkins, a member of the SNC-Lavalin Group, will provide integrated lead design consultant, construction supervision, and cost management services.

The scope of work includes public realm and necessary infrastructure within the plot area along with validation of the pre-concept design, as well as the development of sustainability and environmental assessment methods, design criteria, and standards of the project.

2. PDO awards $1bn worth contracts to NESR subsidiary, Gulf Energy

NASDAQ-listed National Energy Services Reunited Corp. (NESR) has revealed that its Oman-based subsidiary, Gulf Energy, has secured contracts valued at over $1bn (OMR385m) from Petroleum Development of Oman (PDO).

The contract awards cement NESR position in the Sultanate for the foreseeable future and has opened new growth avenues to expand its product lines over the next decade in Oman and across the Sultanate.

The contracts extensions include cementing, coil tubing and stimulation, fishing and milling, and downhole tools contracts for a period of nine years, in addition to a main term of five years with two possible extensions of two years each. The contracts expire between 2030 and 2032.

Moreover, a new contract for directional drilling and turbine drilling was also awarded for a term of up to six years.

3. Schindler wins contract to modernise Riyadh Airport

Swiss-manufacturer Schindler has been awarded a contract to modernise the Riyadh Airport by carrying out fit out works with the installation of new escalators at Terminals 1 and 2, as well as the Royal Terminal of King Khalid International Airport (KKIA) in Riyadh.

The scope of the project covers provision of a reliable, heavy usage escalator system for the airport that helps transport over 28 million passengers per year. The project, to be completed by 2022, includes 74 escalators of the type Schindler 9300.

4. ADNOC awards $324m contracts to optimise onshore field operations

The Abu Dhabi National Oil Company (ADNOC) has awarded contracts worth $324m (AED1.19bn) to optimise onshore field operations and enhance efficiencies as it continues to invest responsibly to drive smart growth.

ADNOC Onshore, a subsidiary of ADNOC, awarded three contracts which will see the procurement and construction of flowlines and wellhead installations across several onshore oil fields in the emirate of Abu Dhabi.

The contracts also include the engineering, procurement, and construction (EPC) of a new bypass system to provide critical backup for the existing crude receiving stations at the Jebel Dhanna and Fujairah export terminals.

The contracts were awarded to Galfar Engineering and Contracting (WLL – Emirates) and Robt Stone (Middle East LLC).

5. Oman’s Madayn awards $6.7m infra contract to Roadline Company

The Public Establishment for Industrial Estates (Madayn) in Oman has awarded two contracts worth $6.7m (OMR2.6m) to Roadline Company to provide infrastructure, support, and necessary services to the Samail Industrial City.

The agreement signed with Roadline Company pertains to designing and implementing a dual-lane road spanning 1.3km from Al Dasur bridge intersection to the main entrance of Samail Industrial City, in addition to another dual-lane road linking the city with Al Sharqiyah Expressway.

It also includes building box culverts for rainwater drainage and lighting along the road, in addition to designing and developing an 11km-long sewage pipe linking Phase 1 and 2 of Samail Industrial City.

6. UAE’s ILF Consulting Engineers wins Jordan petchem PMC contract

UAE-based ILF Consulting Engineers has been awarded a key project management consultancy (PMC) services contract for new ammonia tanks by KEMAPCO Arab Fertilizers and Chemicals Industries Company in Jordan.

ILF has been commissioned with the project management, conceptual or tender design for the EPC contract, as well as construction and commissioning supervision.

KEMAPCO’s facilities currently have a production capacity of 175 Kt of potassium nitrate (NOP) fertiliser and nitric acid per year, which covers approximately 8% of the total global NOP demand.

7. BESIX, Jan De Nul win $101m contract for Fujairah port expansion

BESIX Group, a Belgian contractor, 50% of which is owned by Egypt’s Orascom Construction, has secured a $101m (AED371m) design-and-build contract alongside Luxembourg-headquartered Jan De Nul Group to deliver the expansion of the Port of Fujairah (PoF) in Dibba.

Six Construct, a part of BESIX Group in the Middle East, will work on the Dibba Bulk Handling Terminal Project along with Jan De Nul, with works set to be carried out over 19 months.

The PoF is one of the world’s key oil storage centres and the second-largest ship-bunkering hub in the world. The expansion plans come in line with its strategy to increase the port’s bulk handling capacity and operational efficiency, as well as improve the quality of its service.

The design-and-build contract comprises dredging the navigation channel and port basin, reclamation and shore protection, additionally constructing breakwaters, a 765m-long quay wall, foundations for ship loader rails, port infrastructure, and creating utilities and aids for navigation.

8. Saudi’s AMAALA awards Tamimi Global design-build contract

Saudi Arabia’s 3,800km2 AMAALA gigaproject — the ultra-luxury destination located along Saudi Arabia’s north western coast which is led by the Crown Prince HRH Mohammed bin Salman bin Abdulaziz Al Saud’s sovereign Public Investment Fund (PIF) — has awarded Tamimi Global Co. Ltd. (TAFGA) the design and build contract for the construction of the first stage of the AMAALA Construction Village.

The contract also includes the second and third stages of civil and infrastructure works for the village. Each stage will address the needs of 5,184 future residents at AMAALA, and upon completion will cater to a total occupancy of 15,552 residents.

The accommodations will also be home to a full range of community facilities catering to the diverse needs of on-site staff, AMAALA confirmed.

9. DGDA appoints UNEC as lead contractor for Samhan Heritage hotel

Saudi Arabia’s Diriyah Gate Development Authority (DGDA), which is overseeing the $17.1bn Diriyah Gate gigaproject, has appointed United Engineering Construction Co (UNEC) to lead construction on the five-star Samhan Heritage Hotel, located in the city of Diriyah within the province of Riyadh.

The Samhan Heritage Hotel is the first of several luxury hotels in the recently announced Diriyah development, a 7km2 cultural and lifestyle tourism destination which is an integral part of the delivery of Saudi Arabia’s Vision 2030.

Samhan Heritage Hotel will be nestled amongst the natural beauty of the Samhan district and the Wadi Hanifah, only minutes from the At-Turaif UNESCO World Heritage site.

10. Penspen wins engineering contract for Upper Zakhum in Abu Dhabi

London-headquartered engineering and project management service provider Penspen has been awarded a detailed engineering contract for crude receiving facilities at Jebel Dhana by EPC contractor Target Engineering Construction Company, a wholly owned subsidiary of Arabtec, which recently announced going into liquidation.

In a statement, Penspen said that the scope of work includes the development of facilities for unloading the Upper Zakhum (UZ) field and non-system (NS) crudes at Jebel Dhana from tankers.

The company will implement the work using the existing single point mooring (SPM-2), subsea pipeline, onshore pipeline, and gravity pipeline to the three large tanks already in place.



Saudi’s ‘Sakani’ launches ‘Elite’ project in Dammam with 869 units

The Saudi Arabia Ministry of Housing’s ‘Sakani’ programme has launched its “Elite” residential project north of the King Fahd suburb in Dammam, providing homes to Saudi citizens that can be booked electronically through the Sakani website, the Sakani mobile application, or by visiting the sales centre at the project’s headquarters.

The “Elite” project is an under-construction housing project in the kingdom’s eastern region that is being implemented as part of a public-private-partnership (PPP).

The project covers an area of approximately 500,000m2, and will include 869 villas in different models, which range in areas from 227m2 to 763m2 per unit, with prices starting from $205,000 (SAR769,000) that can be paid in monthly installments.

The Eastern Region is witnessing the implementation of 27 housing projects in partnership with real estate developers, providing more than 20,000 housing units, distributed in a number of governorates of the region with multiple designs and models, including apartments, townhouses, and villas at reasonable prices.

Saudi Arabia’s Ministry of Housing aims to increase residential ownership among its citizens to 70% by 2030. More than 58 housing projects at various stages of construction are being developed in various regions of the kingdom.

The programme provides Saudi nationals with access to residential plots, self-construction residential housing, prefabricated housing units, and under construction housing units, among other options.

The Sakani’s digital platforms provide details of the location, features, and prices of the residential units available for immediate and electronic reservation

The programme also offers Saudi citizens who own land the possibility of obtaining a 100% profit-backed real estate loan to build their own homes. It enables Saudi citizens to receive building permits within six months, start constructing within a year, and complete construction of their homes within three years, according to the state-run Saudi Press Agency.

During 2020, the Sakani programme aims to serve more than 300,000 families through various housing solutions, by enabling more than 130,000 families to move into new homes, offering Saudi families more than 90,000 plots of residential land, and constructing more than 100,000 housing units in partnership with real estate developers.


Saudi Ministry inks deal to boost investment in waste management

Saudi Arabia’s Ministry of Investment has inked a cooperation agreement with the kingdom’s National Centre for Waste Management to boost investment prospects in the waste management sector.

The agreement was signed in the presence of the Minister of Investment, HE Eng Khalid bin Abdulaziz Al-Falih, and the Minister of Environment, Water, and Agriculture, Eng Abdul Rahman bin Abdul Mohsen Al-Fadhli.

Preliminary estimates indicate that more than 53 million tonnes of waste are produced in the kingdom annually, including municipal solid waste, demolition, and construction waste, medical and industrial waste, and others, which reveals the size of the large investment opportunities that this sector promises.

In addition, the large population growth rates in the kingdom; the industrial and urban boom in all cities and regions; and the rising standards of living and increased spending power in the kingdom is expected to lead to a significant increase in the production of waste.

The Minister of Investment stressed that signing the agreement is the first step towards cooperation, and pointed out that collaborative work will help transform the challenges in the industry into investment opportunities and enhance the country’s development.

Al-Falih pointed out that the Ministry of Investment will work to strengthen the strategic partnership with the National Centre for Waste Management through this agreement to coordinate and unify efforts, find solutions to the challenges facing investment in this sector, and improve the investment environment in it in order to contribute to the recycling industry and waste management programmes.

The Minister of Environment, Water, and Agriculture explained that the signing of this agreement will contribute to achieving the strategic objectives of the waste management sector in the kingdom; activating the principle of circular investment in waste facilities management; establishing the integration work between all relevant sectors; and building capabilities for the growth of information in this field.

Saudi Arabia has carried out a number of structural reforms in the Saudi economy, and launched a group of emerging sectors, including the waste management sector that aims at integrated economic and environmental sustainability, by increasing the efficiency of waste management, establishing comprehensive recycling projects, and reducing all types of waste pollution.

According to the state-run Saudi Press Agency, the National Centre for Waste Management aims to manage, regulate, and monitor the waste management sector in the kingdom, in addition to stimulating investment in the sector and improving its quality by setting standards, controls, and technical requirements for integrated waste management activities.


Tourism Development Fund inks deals to finance $43bn KSA projects

Saudi Arabis’s Tourism Development Fund singed a deal with two local banks to finance tourism projects in the kingdom worth $42.7bn (SAR160bn).

The kingdom is the home to gigaprojects that are not just driving the nation’s tourism sector, but helping the country achieve its Vision 2030 agenda. These projects include the $500bn (SAR1.9tn) NEOM; the 28,000km2 The Red Sea Project; the 366km2 Qiddiya entertainment city; the $17.1bn (SAR64.1bn) Diriyah Gate; as well as the 4,155km2 AMAALA.

The financing deals were singed in the presence of Saudi Minister of Tourism and chairman of the fund’s board of directors, Ahmad Al-Khateeb by the Tourism Development Fund’s CEO, Qusai Al-Fakhri with the CEO of Riyadh Bank Tareq Al-Sadhan, and the managing director and CEO of Banque Saudi Fransi, Rayan Fayez, the Saudi Press Agency (SPA) reported.

The deals are based on the setting up financing programmes to support and develop the tourism sector in the kingdom.

The statement by SPA said: “This agreement includes defining ways of cooperation between the fund and the participating banks by setting up mechanisms to support financing tourism projects in various regions of the Kingdom.”

Additionally, the deal will also help stimulate investments in the tourism sector and support the private sector, small and medium-sized enterprises (SMEs), by providing various financial products. These products include multiple credit facilities and financial guarantees in partnership with commercial banks designed to serve a large number of investor segments in the tourism sector to facilitate financing operations for tourism projects.

Commenting on the deal, Al-Fakhri said: “This agreement constitutes an essential step toward supporting and developing tourism projects in the Kingdom.”

He added that the role and commitment of the fund to support and develop the tourism sector continued by stimulating investment and building a solid relationship with banks and financial institutions, which would create distinct investment opportunities in Saudi Arabia.

Meanwhile, the CEO of Riyadh Bank said that the partnership will enhance the role of banks in supporting the private sector, including small and medium enterprises, and enabling the development of tourism projects in the Kingdom. He stated: “The tourism sector is one of the most important sectors that support the economy.”

Fayez said that the agreement coincides with the effective role of banks in achieving the objectives of the tourism sector, which is one of the most promising sectors for investment, and will be the beginning of an effective partnership with the fund, which will contribute to creating investment opportunities in the Kingdom.

He pointed out that these agreements play an important role in creating tourism projects and destinations, which in turn contribute to achieving the goals of the National Tourism Strategy, which aims to increase the contribution of the tourism sector to the GDP from 3 to 10%, provide one million new jobs, and receive 100 million local and international visitors by 2030.


Saudi Sakani’s “self-construction” benefits 51,000 families in 2020

The self-construction option offers subsidized loans and executive engineering designs that help citizens build their own units

The self-construction option of the Sakani programme offers support in obtaining a mortgage loan, which gives Saudi citizens the freedom to build their own units, and enables eligible citizens who own residential land to construct appropriate housing for their families.

In order to obtain the subsidised loan for self-construction, the citizen must be registered in the ‘Sakani’ scheme; must own residential land; have a valid building permit; have a fixed income that enables him to obtain a loan; and must not have previously availed of housing support from the Ministry of Housing or the Real Estate Development Fund.

This enables citizens to construct their residential units using innovative, high-quality, and modern designs. The service also provides competitive prices from 15 experienced designers, according to the state-run Saudi Press Agency.

During the first eight months of 2020, the Sakani programme has served more than 254,000 families through all of its solutions and options, including the purchase of land; self-construction; the purchase of ready-made or under construction units, and more, taking the programme another step closer to its target of helping 300,000 families in 2020.


Saudi Arabia’s construction sector is powering Vision 2030

The infrastructure and construction industry is a crucial pillar of the government’s plan to overhaul the Saudi Arbia economy. Anwar Hadidi and Nav Dulay from Deloitte explain why.

Prior to the Covid-19 outbreak, it was reported that the infrastructure and construction industry in Saudi Arabia was amongst the largest in the Gulf Cooperation Council (GCC) region, with more than $825 billion worth of planned and unawarded projects. The industry had seen growth in the contracts awarded – from $11.2 billion in 2016 to $14.6 billion in 2018.

However, given the volatility experienced around the world as a result of the recent pandemic and the fluctuating oil price, the forecast for construction output growth has been revised from 4.6% to 2.9% in 20203. This forecast is based on a positive scenario that the market will return by the third quarter of 2020, with eased travel restrictions which will aid international mobility into the Kingdom. However, if this mobility forecast should alter, then there may be a further downgrade expected to the output growth projections, which are dependent on international infrastructure specialists and government support.

With increased focus from both the private and public sector, the need for infrastructure and construction development will continue to grow in line with Vision 2030. As the Kingdom further opens the leisure and hospitality market, the ease of travel to the Kingdom will continue to drive growth in the hospitality sector.


This has seen an increase in the number of rooms being built, leading to international hoteliers having an increased construction and development need to drive their growth ambitions, supported by foreign direct investment. Although this has seen a recent marginal slowdown as a result of the impact of Covid-19, activity is expected to return with Saudi Arabia having the largest pipeline of rooms under development in the region with approximately 210 projects that aim to deliver over 69,000 rooms, which is in line with the Kingdom’s strategic vision to transform the country to further aid future stability.

Powering the construction sector

Saudi Arabia has embarked on a journey to undertake a large-scale economic overhaul, which has seen both private and public sector companies focused on reforms, further supporting Vision 2030. Under this, the government is planning Saudi Arabia’s economic, educational and related wholesale reforms with the aim of innovating and diversifying the Kingdom’s landscape.

To accomplish these goals, the government has created the National Transformation Project (NTP), an action plan to improve three overarching and important pillars of the country: economic enablers, standards of living for its citizens, and governmental operational excellence.

Vision 2030 and the NTP provide the foundations underpinning the integration of sustainable development goals into the national planning process. One of the key programs of Vision 2030 – Life Quality – is directly linked to the sustainable development goals. At the heart of all this sits Saudi Arabia’s infrastructure and construction industry.

With ongoing investment and technological advancements, the country is investing in diverse projects. The aim of such large-scale initiatives is to provide access to housing opportunities for lower-income groups, create new employment opportunities, and further diversify the economy. Saudi Arabia is planning to invest approximately $1 trillion in the country’s non-hydrocarbon sector by 20305. Some of the key projects include Neom, the Red Sea Project, Qiddiya Entertainment City, King Abdullah Financial District and Amaala, to name a few.

These substantial infrastructure investments are the foundation on which the Kingdom is envisioning its new future. Along with these ‘giga-projects’, Saudi Arabia is also investing in many social and urban development projects, such as the Sakani housing program, further illustrating the country’s commitment to driving development using smart tech.

In order to further enhance mobility in the Kingdom, the government is investing in expanding the transportation infrastructure through city infrastructure projects, such as the $22.5 billion Riyadh Metro and Riyadh Rapid Bus Transit System. Reflecting the changing times, Saudi Arabia’s infrastructure and construction industry continues to be driven by technology adoption, dynamic approaches to construction delivery and implementation of new operating standards, which further fuel infrastructure and construction growth in the country.

Technology adoption

With mega-projects such as Neom, the Kingdom’s PropTech market is expected to gain further traction. Approximately $2 million in seed funding has been allocated to home maintenance services startups such as B8ak, FalconViz, Ajeer, and Muqawiloon. PropTech is disrupting and improving the way transactions of residential and commercial properties take place, changing the traditional ecosystem. Alongside this and in the post-Covid-19 era, the need to drive technology adoption in construction with the use of AI, robotics and 3D printing will become more important to meet future demand in a changing world.

Dynamic approach to construction delivery

Technology adoption is expected to continue to transform construction delivery. The use of prefabricated building techniques, such as those used by the Ministry of Housing with 3D printing, reduces the construction time, provides standardisation, improves quality and is less labor intensive than traditional techniques whilst adding agility and addressing continued demand.

Implementation of new operating standards

To incorporate the sustainable development goals into existing processes, the Saudi government is actively working towards investing in green buildings and standardising the building rating system. The Ministry of Housing developed a new standard for rating buildings, known as the Mostadam Standard.

Referring to the Saudi Building Code (SBC) and designed to comply with existing legislation while reflecting regional building rating requirements, the Mostadam Standard was launched in 2019. The government remains conscious of the need to develop sustainable buildings in order to reduce the impact of buildings and construction on energy usage and CO2 emissions.

The infrastructure and construction industry remains crucial to the government’s plan to overhaul the Kingdom’s economy, more so now as post Covid-19 actions are being planned, taking into account the economic challenges the pandemic presents. With giga-projects incorporating a mix of technology and sustainable development elements, the government is trying to engage not only marginalised communities but the young demographic as well.

The Kingdom has ongoing support from some of the largest funds in Saudi Arabia, which continue to invest in key projects, such as the recently launched real estate company ‘Roshn’ led by PIF, which will specialise in developing integrated urban neighbourhoods containing residential communities across the country; this, coupled with an optimistic sense of improvement in the global trade environment, is further empowering the Kingdom to usher in a new era led by digital transformation and emerging industries, which will positively impact both current and future generations.


$500B Saudi City NEOM Selects Bechtel to Accelerate Work

NEOM has selected Bechtel to accelerate primary infrastructure development for its Cognitive Cities. It has awarded a contract to the U.S.-based global industry leader for executive project management work.

Saudi Arabia is building the cross border city NEOM, a US$500 billion futuristic mega-project deep in a desert bordering the Red Sea — the Kingdom says “it will be 33 times the size of New York City with plans for flying cars and robot dinosaurs”, according to a report in Business Insider.

Neom is a portmanteau of the Greek word neos, meaning “new,” and mustaqbal, the Arabic word for “future”

“Blueprints obtained by the Wall Street Journal detail wild plans for artificial rain, a fake moon, robotic maids, and holographic teachers. Phase one is due for completion in 2020, with the final brick laid in 2025.”

According to a report posted by Bechtel in LinkedIn, the US engineering and consulting giant with global outreach, will oversee and create resource-efficient utilities and a highly advanced transport system to connect NEOM’s cognitive cities. Work will include simultaneous construction in multiple locations requiring extraordinary engineering solutions in challenging terrain.

“After Jubail, the 2nd world class city construction has started with area of 42000sqkm.. (and the) city size is anew as Belgium,” says an American professional based in Riyadh.

It will cover 10,230 square miles, and cost Saudi Arabia’s Public Investment Fund at least $500 billion — plus millions in foreign investment if it can get it.

“Infrastructure and master planning work has started at site and offsite. Firms from UK, US and other countries are also involved”.

Besides Bechtel, Aecom, SNC Lavalin are also in the US$500 billion project, says a source.

So far, Neom Co has also signed contracts with Saudi telecom company STC for a 5G network, and a $5bn partnership with US-based Air Products and Saudi Acwa Power to develop the world’s largest green hydrogen and green ammonia plant, to be operational in 2025.

The NEOM dovetails Saudi crown prince Muhammad bin Salman’s Vision 2030 plan launched in April 2016.

It is being built in the Tabuk region near the kingdom’s border with Jordan and sits next to Gulf of Aqaba, bordering Israeli’s port Eilat in the north and several Egyptian ports along the south.

Neom is part of Vision 2030: an ambitious plan to revolutionize Saudi society, reduce dependence on oil, and make the country a technology hub

Many regional experts see the ambitious real estate project as a strong link that might bind Saudi Arabia with Israel for the long haul.

Planned as a beacon for the future of urban living in the kingdom based on 5G technology and renewables, NEOM will be far beyond the capabilities of today’s smart cities. Its infrastructure will utilize AI, robotics, and human-machine fusion to deliver greater predictive intelligence and enable faster decision making across all sectors.

According to reports, NEOM (a planned 16-borough city) will be the home and workplace to more than a million residents from around the region and around the world.

Neom is supposed to draw on “cloud seeding” technology to make artificial clouds which will produce more rainfall than naturally possible in the desert

Commenting on the award, NEOM CEO Nadhmi Al Nasr said: “Built from the ground up as a model of future living, NEOM will be one of the largest, most sophisticated and advanced infrastructure projects ever undertaken globally, and we are delighted to have a major industry leader like Bechtel on board to work with us to realize our ambitions.”

Bechtel Chairman & Chief Executive Officer, Brendan Bechtel said: “NEOM is one of the most complex projects in living memory and we are proud to be part of it. The vision for a futuristic, innovative and sustainable ecosystem is unique and bold, and we believe NEOM will change the way new cities are developed by future generations. We have helped our customers shape the Kingdom’s history with many key projects and we are honored to be a partner in building its future.”

Neom will also have the “leading education system on the planet,” with classes taught by holographic teachers

Bechtel has long experience of working in Saudi Arabia, beginning with the construction of the Trans-Arab Pipeline in 1947.

More recently, it has worked on Jubail Industrial City and the Riyadh metro.


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