BMI View : The outlook for growth in the Saudi Arabian construction sector over 2017 is poor as liquidity remains tight and the government ' s realignment of the project pipeline and effort to improve efficiency in project delivery through the introduction project management offices slows project progress. Vision 2030 will be key to opening up the infrastructure market , with the potential of private investment in transport sectors to energise the sector.
Forecast & Industry Developments
We forecast overall construction growth of 1.9% y-o-y for 2017. This will be an acceleration on 2016 as the industry recovers from the government failing to pay contractors and benefits from slightly improved liquidity and more efficient project implementation.
From the demand side for the construction sector, we expect a continued lull of large-scale investment plans in the short term as concerns over the economy remain. In September 2016, the government enacted wide-ranging fiscal reforms, which pared subsidies and salaries in a variety of sectors. The announcement of the Vision 2030 and associated National Transformation Plan (NTP) confirmed a number of our previously highlighted long-term themes for the Saudi Arabian construction market; namely infrastructure is at the centre of realising diversification plans; and private sector participation will become increasingly common.
|e/f = BMI estimate/forecast. Source: SAMA, BMI|
|Construction industry value, SARbn||162.75||170.07||179.77||194.15||210.77||233.32||256.65||279.75||306.33||333.90||362.28|
|Construction Industry Value, Real Growth, % y-o-y||5.59||0.50||1.90||4.40||5.16||7.50||7.00||6.00||6.50||6.00||5.50|
|Construction Industry Value, % of GDP||6.6||7.0||6.6||6.6||6.7||6.9||7.1||7.3||7.6||7.8||7.9|
Saudi Arabia's Infrastructure RRI score has fallen this quarter to 66.0 out of 100, although this still means the market scores well above the regional average of 54.5 for MENA.
Saudi Arabia has the largest construction market in the GCC and scores highly for the amount of investment made in the economy. The labour market is the biggest risk in the construction sector.
Saudi Arabia's reliance on oil exports and its intervention in Yemen has exposed the country to growing risks, lowering scores in this section of the RRI.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Saudi Arabia Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Saudi Arabia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Saudi infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Saudi Arabia to test other views - a key input for successful budgetary and planning in the Saudi infrastructure market.
- Target business opportunities and risks in the Saudi infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Saudi Arabia.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.