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Saudi Arabia: 25 gigaprojects in construction, with Western region leading

Knight Frank predicts that the value of Saudi Arabia’s construction projects will grow to $181.5 billion by the end of 2028

Saudi Arabia: Residential construction comprised 31% of all project value at $43 billion in 2023

According to Knight Frank’s ‘Construction Landscape Review for H1 2024’, Saudi Arabia is witnessing significant development in its construction industry, with the construction output value for various sectors reaching $141.5 billion, a 4.3% increase from last year. This growth is evident in residential, institutional, infrastructure, industrial, energy & utilities, and commercial sectors.

The total budgeted value of real estate and infrastructure projects has exceeded $1.25 trillion since the launch of the National Transformation Plan in 2016. The urban landscape is undergoing a noticeable transformation driven by Vision 2030, with plans to deliver over 660,000 residential units, more than 320,000 hotel rooms, over 5.3 million square metres of retail space, and more than 6.1 million square metres of new office space by the end of the decade.

The residential sector leading from the front

In Saudi Arabia, the residential sector leads in construction output value, accounting for 31% ($43.5 billion) of the total in 2023 and is expected to reach $56.9 billion by 2028. The energy and utilities sector is close behind at $35.1 billion, projected to increase to $46.5 billion by 2028. Overall, the Kingdom’s construction output value is forecast to reach $181.5 billion by the end of 2028, establishing Saudi Arabia as the largest construction market globally.

Having analysed construction rates per square metre for various residential projects in the Kingdom, Mohamed Nabil, Regional Partner, Head of Project & Development Services, MENA, revealed, “The variance in construction costs is primarily attributed to the unique differences in the scale, quality and type of construction projects, ranging from ($1,000-2,700) SAR 3,800-10,000 per square metre. Using the lower end of this range as well as the data on average dwelling size, the cost to deliver the Kingdom’s planned 660,000 homes by 2030 will cost at least $175 billion.”

Nabil continued, “Notably, 38% of the existing contract award value accounts for Riyadh Province, equating to $54 billion, followed by Mecca and Tabuk Provinces at $28.7 billion and $28.5 billion, respectively.”

Gigaprojects will give the Kingdom a massive makeover

The primary impact of Vision 2030 has been the emergence of new super-cities, primarily gigaprojects in the Kingdom, particularly in the Western region. Knight Frank’s analysis indicates that there are currently 25 gigaprojects in various stages of construction in Saudi Arabia, with the Western region taking the lead in development. The region is projected to receive investments worth $692 billion, representing 55% of the total $1.25 trillion development plan.

Reflecting on this, Amar Hussain, Associate Partner, Research, ME, added, “With a value of over SAR 1.25 trillion launched but not yet delivered, gigaprojects are undoubtedly transforming the Kingdom’s urban landscape. Nationally, the planned volume of residential units has risen to 660,000 units, an increase of 30% in the last 12 months. Meanwhile, the office pipeline is steady at 6 million square metres. In the commercial market, plans are currently underway for 5.3 million square metres of retail space and an additional 320,000 hotel rooms, which will contribute to Saudi Arabia’s objective of growing the population to 40 million and accommodating 150 million visitors by 2030.”