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Giga-projects gobble up building supplies and talent

By Andy Sambidge
Worker on a Riyadh building site. Contractors expect strong growth in Saudi residential, commercial and infrastructure projects over the next year Reuters/Faisal Al Nasser
Worker on a Riyadh building site. Contractors expect strong growth in Saudi residential, commercial and infrastructure projects over the next year
  • Saudi busiest market in Q3
  • Costs driven up in UAE
  • War for talent intensifies

Saudi Arabia’s enormous building programme is luring workers from other GCC countries and placing a strain on the supply of raw materials, construction executives have warned.

Builders in the UAE in particular are concerned about the resources demanded by the Saudi market, which posted record growth in construction activity during the third quarter.

The latest Global Construction Monitor from the Royal Institution of Chartered Surveyors (Rics) found that Saudi Arabia was the busiest market in the world in Q3.

The Middle East and Africa was the busiest region, according to the Rics report, and the war for talent is intensifying across the Gulf as work continues on multi-billion-dollar Saudi projects such as Neom, Diriyah and the Red Sea.

Contractors in the UAE told Rics that the giga-projects were straining the materials market and driving up costs in the Emirates, especially in Dubai.

They also said the booming market had led to some tenders for Saudi projects being 400-800 percent higher than projects with the same scope in the UAE, based on exaggerated estimates of overheads and profits. 

Construction companies in the kingdom foresee strong growth in workloads across all sectors – private residential, private commercial and infrastructure– in the next 12 months.

Saudi Arabia announced its latest giga-project in August: an 11km long canal and mixed-use waterfront project north of Jeddah. It will be developed by Roshn Group in partnership with the kingdom’s Public Investment Fund.

In May, Jordan D’Gama, head of strategic partnerships for the Middle East and Africa at Rics, told AGBI that it had noticed “a significant increase in demand from both member and non-member firms in the war for skilled construction talent within Saudi Arabia” since the pandemic. 

He added: “In particular, we have noticed this as developers seek to ramp up activity in Saudi’s giga-projects in line with Vision 2030.”

Construction executives working in Oman also complained that Saudi Arabia was “sucking up” all available resources.

However companies working in Saudi Arabia insist they too are experiencing a shortage of skilled workers. 

During Q3, 70 percent cited this as an impediment to growth, compared to less than 50 percent across the wider Middle East and Africa.

Real estate consultancy Knight Frank described Saudi Arabia last year as "the biggest construction site the world has ever seen".

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