The total value of contracts awarded across Saudi Arabia for the third quarter of 2022 reached SR25.2 billion ($6.7 billion) as the construction sector is headlined by a number of Vision Realization Programs (VRPs) relating to tourism and housing along with physical infrastructure developments, according to a report by the US-Saudi Business Council.

Despite a six per cent year-on-year (YoY) dip in awarded contracts during Q3, the value thus far is on track to exceed 2021’s performance, stated the council.

Through the first three quarters, the value of contracts awarded surged to hit SR119.7 billion, representing a 67 per cent climb over last year.

The USSBC Contract Awards Index (CAI) retracted to 188.11 points by the end of the third quarter, the first time it finished a quarter below 200 points since Q3 of 2021.

Although the CAI declined, the construction sector continues to operate in an expansionary environment as it remains well above the 100-point threshold that separates expansion from contraction, stated the council in its report.

The CAI grew by 73.27 points (up 64 per cent) YoY and decreased by 41.88 points (36 per cent) QoQ.

The CAI’s performance during the first three quarters reveals the resurgency of the construction sector. The value of executed projects witnessed a sizeable rebound after bottoming out in 2020, stated the council in its report.

The gradual decrease in building material costs coupled with growing demand for cement has facilitated projects currently in the execution stage along with developments that are on the short-term horizon.

The awarding of mega-projects across a number of sectors will keep construction activity buoyed in the coming years as VRPs are expected to be delivered, it added.

According to the council, the real estate sector rebounded from a soft Q2 with 15 contracts worth SR12.6 billion having been awarded during the third quarter.

Mixed-use real estate led with one contract worth SR7.5 billion, while the residential real estate market witnessed eight contracts worth SR4 billion, followed by commercial real estate with four contracts worth SR548 million, and hospitality with two contracts worth SR544 million.

Overall, the real estate sector grew by SR11.7 billion QoQ during Q3 and increased by SR6.3 billion or 102 per cent YoY.