Big 5 builders seek answers to Saudi’s $1.5trn question

Eliot Blondet/Abaca Press via Reuters

• Construction bosses gather for Big 5
• Giga-project deadlines grow near
• But Riyadh has set eco-targets too

Saudi Arabia’s mammoth pipeline of giga-projects was the focus of the Big 5 Global conference in Dubai this week, as the region’s main construction players discussed how to juggle fast-approaching 2030 deadlines with the kingdom’s push for sustainable development.

Saudi Arabia has signed off on $78 billion of construction projects so far this year, up 42 percent from $54.5 billion in 2015, just before the announcement of the Vision 2030 programme. 

The total value of ongoing projects in Saudi Arabia was $1.487 trillion at the end of October, according to the Saudi Contractors Authority.

• Giga-projects gobble up building supplies and talent
• Expo 2030 to spur giga-project construction
• Saudi Arabia to host 2034 World Cup

Just over a year ago, real estate consultancy Knight Frank described the kingdom as “the biggest construction site the world has ever seen” – and this was before Riyadh won hosting rights for Expo 2030 and the World Cup 2034.

The industry will “never see again” work on such a scale, said Jonathan Looker, Middle East development director at engineer Mott MacDonald, at the conference on Tuesday.

But as several industry leaders speaking at Big 5 pointed out, capacity becomes a problem when all these huge developments near completion at the same time.

David Grover, chief executive of Saudi Roshn Group, said during one Big 5 panel discussion that he had been grappling with resource constraints for some time. 

In August, Roshn was awarded the kingdom’s latest giga-project in partnership with the Public Investment Fund: to dredge an 11-kilometre-long canal north of Jeddah and build a mixed-use waterfront complex for some 130,000 residents.

Roshn is already overseeing four other mega-developments in Saudi Arabia. It also owns the land surrounding the Expo 2030 site, Grover said on Tuesday, adding that his team has been preparing to leverage the possible arrival of the event for three years. 

Reuters/Ahmed Yosri

To secure the steady flow of materials – including tens of millions of doors, windows and cement blocks – that Roshn’s projects will require for the foreseeable future, Grover has been working to strengthen his group’s network of suppliers. 

“We’ve done capacity studies ourselves and we can see areas of the market where there’s a lack of supply just for us,” he said. “So, we’re investing in the supply chain because we realised if we don’t do something like that, the market’s going to overtake us and suddenly our margins just disappear.”

Build more, build greener

Saudi Arabia is trying to combine its development ambitions with a goal to reach net zero by 2060, creating opportunities and additional hurdles for the construction industry.

The work of implementing green standards has proceeded seamlessly in the transition from masterplanning to design, according to Raed Albasseet, chief environment and sustainability officer at tourism mega-developer Red Sea Global.

But it is proving more challenging in the operational phase. In particular, certifying bodies have been inconsistent in providing guidance on key metrics, Albasseet said during one Big 5 session. 

He added later, though: “We are doing it. It’s not fantasy. We are delivering on it. It’s not challenge-free. We need you all because we have big challenges to overcome. But we are serious about the change.”

Industry figures from outside Saudi Arabia also pointed to how serious the kingdom is about its sustainability targets.

Michael Schlunegger, director of business development in the Middle East for Schüco – a German window, door and facade supplier whose Saudi clients include Neom – told AGBI that foreign companies tendering for work on giga-projects would face serious scrutiny of their own and their supply chains’ environmental practices.

“You have to bring sustainability approaches to the table, which will be looked at by experts,” he said. “And they will be looking at them with a more holistic approach, checking your supply chain, where your material is from."

For many Big 5 attendees, the opportunities in the kingdom seemed to trump the risks.

“I think Expo 2030 will be a massive success for Saudi Arabia,” James Duncan, director for business development in the Middle East at construction manager Hill International, said on Monday. 

“It's a very big event on anybody's calendar."