BMI View : Despite slowing public investment, Saudi Arabia's infrastructure and construction sectors are expected to remain in positive territory. A strong project pipeline will drive healthy growth over the medium term, particularly in transport and energy infrastructure sectors. Large-scale development of social housing projects will also stimulate growth in residential construction, though this sector will likely remain the underperformer in light of the lack of investment incentives. Some downside risk stems from falling oil revenues which could lead to project delays and cancellations.
Latest Updates And Structural Trends
The residential and non-residential construction sector has received a boost with the recent announcement of a USD20bn project to build 100,000 homes in a new town called Dahiyat al-Fursan. Several other new towns are currently under development, supported by government commitments to expanding social housing availability in the country.
Rising electricity demands and an attempt to diversify the power mix mean Saudi Arabia will continue to invest in new power capacity, focusing on natural-gas fired power and to a lesser extent solar power.
In the transport sector, the privatisation of several airports will stimulate some investment over the medium term, while the government remains focused on expanding rail networks and improving domestic and cross-border road connections.
Overall we expect to see 6.5% growth in total construction sector value in 2016, based on the progression of a number of key projects such as the Riyadh metro and the Sadara Industrial Complex. Over the remainder of the forecast period, growth is expected to slow as the government streamlines public infrastructure expenditure in the wake of falling oil revenues.
|e/f = BMI estimate/forecast. Source: SAMA, BMI|
|Construction industry value, SARbn||165.66||182.23||206.81||231.87||257.75||287.65||320.73|
|Construction Industry Value, Real Growth, % y-o-y||6.10||6.50||9.49||8.12||7.16||7.60||7.50|
|Construction Industry Value, % of GDP||6.8||5.9||6.1||6.3||6.5||6.6||6.8|
Saudi Arabia's Infrastructure RRI score has remained stable this quarter at 71.3 out of 100, placing it above the MENA regional average.
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.