With the Saudi sovereign wealth fund Public Investment Fund (PIF) pushing for more projects spurred by improved macroeconomic fundamentals and the uptick in contract awards over five consecutive quarters, industry experts believe the kingdom’s construction market will be back to its pre-pandemic levels this year, reported Arab News.
This push is mainly the result of the PIF spending on big-ticket developments like Neom and The Red Sea Project as well as the increase in capital investments by Saudi Aramco, which plans to raise its oil and gas production capacity further, they stated.
In 2021, the contracts industry registered a 78 per cent rise in activities when compared to 2020 and this upward momentum is expected to continue in 2022, according to the US-Saudi Business Council. The increase last year, however, was still below the levels the industry saw in 2013 and 2014 during the boom in oil prices, it stated.
The region will witness considerable investments in the medium to the long run with government entities such as the PIF and policies such as the National Investment Strategy (NIS) injecting liquidity into sector, according to industry experts.
The NIS expects to inject a substantial SR5 trillion, even as the PIF has intended to infuse SR150 billion per year till 2025. All these will translate and cascade into growth of construction activities, they added.
Buoyed by the resurgence of the industry post-pandemic, contract awards surged to SR142 billion ($38 billion) in 2021 with Q4 alone registering SR70.2 billion, the highest in nearly six years, reported Arab News, citing the USSBC.
The kingdom has seen an uptick in contract awards over five consecutive quarters, which is really strong growth for the construction sector, it stated.
The oil and gas sector awarded contracts worth SR34.9 billion in Q4, followed by the power sector at SR12.1 billion and real estate at SR7.6 billion, it added.