Giga-projects Saudi construction contracts balloon since 2015 By Andrew Hammond November 7, 2023, 7:55 AM Shutterstock/Party People Studio Giga-projects include the city of Neom and the Red Sea Project and Amaala tourist resorts Nearly $1.5trn of ongoing projects 42% boost since Vision 2030 began Drive is hitting GDP growth 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 project. The statistics, provided by the Saudi Contractors Authority (Scavo), show the total value of ongoing projects as of the end of October at $1.487 trillion, reflecting the impact of giga-projects on the Saudi economy. In September Knight Frank, the property consultancy, put the total value of real estate and infrastructure projects at $1.25 trillion, in addition to $250 billion in commissioned projects. Saudi construction under pressure to deliver on its promise ‘Unrealistic’ deadlines spark construction disputes in Gulf Saudi GDP shrinks following oil output cuts The giga-projects include the city of Neom, the Red Sea Project and Amaala tourist resorts, the education and sports city Qiddiyya, the entertainment district Seven, and the Roshn and Jeddah Central housing projects. There are also five economic zones and other infrastructure schemes. Saudi Arabia has cut back oil output in an effort to push up global prices to try to provide extra funding for the projects, risking a significant slowdown in economic growth. The government expects GDP growth of just 0.03 percent this year, down from 8.7 percent in 2022. Scavo said there were 167,100 entities in the construction sector at the end of 2021, the latest figures available, against 175,500 companies in 2020 and 166,000 in 2019. The sector employed 2.46 million workers in late 2022, down from 2.8 million in 2020. A spokesperson said the industry was recovering from setbacks caused by the Covid-19 pandemic, which explains the slight fall in companies and employees in the last two years. She said that more than 8,000 construction companies, mostly small firms, pulled out of the Saudi market in 2021. “The market is definitely picking up,” she said. Some of the giga-projects announced over the past two years are still only at the feasibility study phase, according to statistics presented by Scavo last month at a construction industry conference in Riyadh. This includes the downtown Riyadh project known as Murabba. While it is the most expensive of the announced projects, valued at $48 billion, it is still far from breaking ground. Construction firms are under pressure from developers who are awarded contracts by the Public Investment Fund, which manages the giga-projects, to produce results. This includes reproducing architectural designs that look spectacular on paper but are difficult to engineer in real life, industry experts say.
