Riyadh dominates Saudi Arabia’s construction market

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• Riyadh has 40% of existing contracts
• Value of developments is $54bn
• Mecca and Tabuk follow capital region

Riyadh and its surroundings account for nearly 40 percent of the value of existing construction contracts in Saudi Arabia, at US$54 billion, according to new research.

The provinces of Mecca – which includes Jeddah – and Tabuk in the north of the kingdom follow the capital region, with $28.7 billion and $28.5 billion in awarded contracts respectively, real estate consultancy Knight Frank said on Monday in its Construction Landscape Review – H1 2024.

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Mohamed Nabil, Knight Frank’s regional partner, said construction sector contract awards account for 61 percent of the total value, while the transportation sector follows in second place at 33 percent.

Ongoing projects across the residential, institutional, infrastructure, industrial, energy and utilities and commercial spaces in Saudi Arabia reached a combined $141 billion at the end of 2023, 4 percent higher than the previous year. 

The giga-project development plans of Riyadh province, Western Saudi and the kingdom’s other provinces have a total value of more than $935 billion.

Residential construction comprised 31 percent of all project value at $43 billion in 2023, with the energy and utilities segments following with $35 billion.

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Knight Frank predicted that the value of the kingdom’s construction output will grow to $181 billion by the end of 2028, which the consultancy said would make Saudi Arabia the world’s largest construction market.

Budget shortfalls, higher interest rates and growing but still insufficient foreign direct investment have some analysts worried that the scale of Saudi Arabia’s historic construction push may have to be restrained in the years ahead.