Value of Saudi project contracts doubled to $24.6bn in 2022

neom.com/newsroom

• Neom contracts valued at $10.6bn
• Kingdom’s projects forecast to hit $64 billion this year 
• Saudi to account for more than 50% of Gulf’s total of $110 billion

The value of giga-project related contracts awarded in Saudi Arabia in 2022 grew by 103 percent to $24.6 billion from $12 billion the previous year.

As the kingdom accelerates activity towards achieving its Vision 2030 economic diversification goals, Neom saw the highest number and value of awarded contracts, especially on infrastructure works on The Line.

Of the top 25 Saudi contracts, Neom accounted for five, with their total value standing at $10.6 billion, according to Meed Projects’ Saudi Arabia 2023 Outlook and 2022 Review. 

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The trend is continuing this year with Neom accounting for $1.4 billion of the $2.5 billion of contracts awarded to giga-projects so far.

Other giga-projects include Diriyah, Red Sea Global (RSG), Qiddiya and Roshn.

Diriyah, located on the edge of Riyadh, is a $63.2 billion mixed-use development that will offer retail, cultural and tourist attractions, along with residential and hotel units, commercial spaces and recreational facilities.

Plans include the world’s largest modern downtown in the north-west of Riyadh. Spread over 19 sq km, it is forecast to add SAR180 billion ($48 billion) to Saudi’s non-oil GDP.

At its heart will be “Mukaab”, a 400 sq m, cube-shaped structure, which will feature a museum, technology and design university, multipurpose immersive theatre, and more than 80 entertainment and culture venues.

RSG expects to award upwards of SAR20 billion ($5.3 billion) of contracts in 2023 towards its two flagship tourism projects, Amaala and the Red Sea Project. This January alone it allocated more than SAR2 billion ($533 million) of new awards. 

The Meed review noted that overall Saudi is expected to record an estimated 20 percent year-on-year rise in the value of contract awards in 2023.

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The budget says its sovereign wealth fund, the Public Investment Fund (PIF), plans to invest SAR1 trillion in new projects by 2025.  

PIF has just announced it spent $1.3 billion buying “significant” minority stakes in four local construction companies: Nesma & Partners Contracting, Almabani General Contractors, El Seif Engineering Contracting and Al Bawani Holding.

PIF’s investments will help the local construction industry expand capacity, improve supply chains, accelerate the adoption of advanced technologies and support Saudi’s Vision 2030 diversification plan, it said.

Construction is one of 13 local sectors targeted for investment. The sector has more than $800 billion worth of known, planned and unawarded work, according to Meed data. 

Transport ranks as the second largest sector with around $105 billion in its pipeline while power, industrial, chemical, oil, water and gas combined come in at less than $100 billion. 

Saudi’s appetite for new project awards was boosted by soaring oil prices, triggered in part by Russia’s invasion of Ukraine in March 2022. 

For the first time in nearly ten years, Saudi recorded a budget surplus in 2022 of SAR102 billion ($27 billion) on the back of higher oil revenues and sharp real GDP growth of more than 7.4 percent. 

Construction activity was the highest in the world in the final quarter of 2022, according to a report by the Construction Activity Index of the Royal Institution of Chartered Surveyors.

Neom is expected to remain the largest provider of contract awards, with Meed valuing its active and future projects at nearly $300 billion. 

The kingdom’s project pipeline will dominate the GCC market in 2023, with Saudi projects forecast to reach $64 billion, accounting for more than 50 percent of the total $110 billion worth of contracts expected to be awarded across the Gulf.

The UAE ranks as the second largest ($23 billion), followed by Kuwait ($10.2 billion), and Qatar in a close fourth ($10.1 billion).