KSA CONSTRUCTION OVERVIEW - Organised by - Created by - Intersec Saudi Arabia
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KSA
CONSTRUCTION
OVERVIEW
Organised by
Overview of KSA’s Economic Outlook
According to the International Monetary Fund (IMF), Saudi Arabia (KSA) has announced a bold reform
program under its Vision 2030. Growth is expected to be robust over the medium-term as structural
reforms are implemented (refer Figure 1). Risks are anticipated to arise from uncertainties regarding
future oil prices and the impact on ongoing economic reforms. Moreover, KSA is expected to bring in
additional revenues through new taxes and fees, including Value Added Tax (VAT), extra fees on expats
working in the kingdom and potential additional costs imposed on foreign businesses.
KSA Budget Outlook
KSA’s 2018 budget is deemed the largest ever and the government is expected
to spend US$ 261 Bn.. The budget provides a roadmap for the ongoing
economic transformation directing at the direction of oil prices and energy
equities. Analysts predict that the prime feature of the budget were the key
focus on structural reforms accompanying rising spending patterns. In 2018,
the government forecasts a deficit of US$ 52 Bn., which is equivalent to 7.3%.
KSA’s public budget at a glance from 2015 to 2018
With KSA’s 2018 budget, the government is
recommitting to investments in the future. The
kingdom’s construction market is expected
to show significant growth and offer lucrative
potential due to its Vision 2030, NTP 2020, and
ongoing reforms to diversify away from oil.Figure 1 represents
KSA’s *macroeconomic indicators
Real GDP Growth Rate, 2015 – 2022 Inflation Rate, 2015 – 2022
(all figures in %) (all figures in %)
4.5 6
4.1
4 5
5
3.5
4
3.5
3
3
2.5
2.2 2.2 2.1
1.8 2 2 2 2
2 2
1.7
1.6
1.5
1.1 1
1
0
.5
0.1 -0.2
0 -1
2015 2016 2017 2018 2019 2020 2021 2022 2015 2016 2017 2018 2019 2020 2021 2022
Current Account Balance % of GDP, 2015 – 2022 Population, 2015 – 2022
(all figures in %) (all figures in %)
4 40
35.046 35.747
1.616 33.025 33.685 34.359
2 1.302 32.377
1.219 31.743
0.637 1.155 31.016
0.397
30
0
-2
20
-4
-8.67
-6
10
-8 -4.26
-10 0
2015 2016 2017 2018 2019 2020 2021 2022 2015 2016 2017 2018 2019 2020 2021 2022
*Note: All figures are in annual percentage change; F: Forecasts. In January 2018, the IMF has recently raised its economic growth forecasts for KSA as oil prices rise.
The government expects GDP to grow 1.6% in 2018 and 2.2 % in 2019. 1 SAR= USD 0.26652 Exchange rate taken. Source: IMF, October 2017.Figure 2 represents KSA’s public
budget at a glance from 2015 to 2018
Real GDP Growth Rate, 2015 –2020 Public Expenditure, 2015 – 2018
Value in US$ Billion Value in US$ Billion
240
280
220 208.68516
185.49792 270
200 259.857 260.65656
180 260
162.04416
160 250 246.79752
138.32388
140
240
120
100 230 221.2116
80 220
60
210
40
200
10
2015 2016 2017 2018 2015 2016 2017 2018
Budge Deficit, 2015 –2018 Budget Allocations, 2018
- 20 A 21% Military
-40 B 20% Education
-51.9714 C 15% Health Social Development
-60 -61.2996 D 11% Economic Resources and Public Programs
-80 -82.88772 E 10% Security and Regional Administration
-97.81284 F 9% General Items
-100
G 6% Infrastructure and Transport
-120 H 5% Municipality Services
-140 I 3% Public Administration
2015 2016 2017 2018
Source: Albilad Capital’s report on Saudi Arabia Economy, December 2017.Classification of KSA Construction Market
The construction market in this report comprises of the building, infrastructure and energy markets.
Figure 3 represents the classification of KSA construction market
Building sector: Infrastructure sector: Energy sector:
Residential, commercial, mixed Roads, bridges, railways, Oil & gas and power
use, airports, sports facilities, ports, wastewater and & water
hotels & recreational facilities, sewarage
healthcare, education facilities
and industrial projects
Overview of KSA Construction KSA Contractor Awards by Sector, 2015 – 2018
Value in US$ Billion
Contractor Awards 35,000
30,000
KSA’s contractor awards across the building, infrastructure and energy sectors are forecast
to increase from US$ 34,151 Mn. in 2017 to US$ 40,068 Mn. in 2018. All companies that are 25,000
working on contracts with government departments in KSA will need to modify their bills to
include the 5% VAT. 20,000
The building construction sector is expected to register the highest contractor awards 15,000
followed by the energy and infrastructure sectors in 2018 (refer Figure 4). Increase in
population growth, urbanisation, and tourism are expected to drive growth in the building 10,000
sector especially in the residential and leisure markets. According to Oxford Business Group,
5,00
the government is stepping up investment in KSA’s transport infrastructure, fast-tracking
key projects and creating new opportunities for service providers. Transport infrastructure 2015 2016 2017 2018
gains prominence in the Vision 2030 and National Transformation Programme (NTP) as Buildings 23,582 29,827 14,701 18,022
vital to economic growth. In 2018, the government has allocated 6% of its budget towards Infrastructure 5,515 3,249 4,595 5,786
transport and infrastructure. Energy 20,902 17,869 14,855 16,260
Figure 4 represents KSA’s building, infrastructure and energy construction contractor
awards from 2015 to 2018 in US$ Mn. Source: Ventures ONSITE Projects Intelligence Database: www.venturesonsite.comLandmark Project
Announcements in 2017
• The US$ 500 Bn. NEOM city is 26,500 square kilometers
(km) (10,230 square mile) zone and will focus on industries KSA Boost for the
Private Sector
including energy and water, biotechnology, food, advanced
manufacturing and entertainment. KSA government, the PIF
and local and international investors are expected to invest
over half a trillion dollars into it in the coming years. Phase 1 KSA is to inject US$ 19.2 Bn. into the private sector of the
of the project is expected to be completed by 2025. economy in a bid to stimulate activity in the non-oil sector, which
has been hit by the slowdown in government spending as a result
• KSA has officially declared that public movie theaters will of oil revenue weakness. Housing and small business are major
return to the kingdom for the first time in more than 30 beneficiaries of the stimulus package. Among the measures
years in March 2018. Opening cinemas is anticipated to act announced in a decree by King Salman are a US$ 6 Bn. initiative
as a catalyst for economic growth and diversification. By on subsidised loans to provide housing, a US$ 4 Bn. injection into
developing the broader cultural sector, it will create new new building technologies, and a proposal valued at US$ 3 Bn.
employment and training opportunities, as well as enrich to support the funding of big infrastructure initiatives. Other big
KSA’s entertainment options. By 2030, there are projected to items include a US$ 0.4 Bn. initiative to support companies in
be over 300 cinemas with more than 2,000 screens. financial distress, and a US$ 1.86 Bn. plan to refund government
• KSA will allow women to drive effective from June 2018, fees to small and medium enterprises.
ending a longstanding policy of the oppression of women in
the highly conservative kingdom.KSA’s Major Construction Projects
Top projects expected to be awarded to contractors in 2018
Project Name Client
KA-Care - Alternative Energy Projects - Nuclear Plants King Abdullah City of Atomic and Renewable Energy (KA-care)
Jeddah Light Rail Transit Jeddah Metro Company; Ministry of Transport, Saudi Arabia
King Abdullah City of Atomic and Renewable Energy (KA-Care) -
King Abdullah City of Atomic and Renewable Energy (KA-care)
Alternative Energy Projects - Phase 1
The Avenues Riyadh Shomoul Holding Company
Offshore Berri Field Saudi Aramco
400 MW Wind Power in Dumat Al Janda Renewable Energy Project Development Office (REPDO)
Ammonia Plant in Ras Al Khair Saudi Arabian Mining Company (Maaden)
South Obhur Project - Housing Complex Project - BP-04 & PB-06 Al Raidah (Rayadah) Investment Company
300MW Solar Facility at Sakaka Ministry of Electricity & Water, Saudi Arabia
King Fahd Causeway Passports Island (Saudi Sector) - Phase 2 King Fahd Causeway AuthorityKSA’s Major Construction Projects
KSA’s major projects awarded to contractors in 2017
Project Name Industry Client Project Value (US$ Mn.)
Expansion of King Khalid International Airport -
Buildings General Authority for Civil Aviation (GACA), Saudi Arabia 1,493
Terminal 1 & 2
Expansion of King Khalid International Airport -
Buildings General Authority for Civil Aviation (GACA), Saudi Arabia 1,390
Terminal 3 & 4
AMC Long-Term Medical Care Hospital Buildings Anfas Medical Care (AMC) 1,300
Batterjee Medical City in Dammam Buildings Middle East Healthcare Company (MEAHCO) 1,070
Satellite Haradh Gas Compression Plants
Oil & Gas Saudi Aramco 1,000
(Sa-GCP) - Package 2
South Haradh Gas Compression Plants
Oil & Gas Saudi Aramco 1,000
(S-GCP) - Package 3
North Haradh Gas Compression Plants
Oil & Gas Saudi Aramco 1,000
(N-GCP) - Package 1
Hawiyah Gas Plant Expansion Oil & Gas Saudi Aramco 1,000
Safaniyah - Phase 6 Oil & Gas Saudi Aramco 1,000
Maritime Yard in Ras Al Khair - Lamprell LLC, Dubai, The National Shipping
Infrastructure 780
Dredging & Reclamation Company of Saudi Arabia (Bahri), Saudi Aramco
New International Airport in Hail Buildings General Authority for Civil Aviation (GACA), Saudi Arabia 500
Freeflow Pipelines of Haradh Oil & Gas Saudi Aramco 500KSA’s Major Construction Projects
KSA’s major projects announced in 2017
Project Name Industry Client Project Value (US$ Mn.)
Neom Business City Buildings Public Investment Fund (PIF) 500,000
The Red Sea Project Buildings Public Investment Fund (PIF) 8,000
Public Transportation Network in Taif Infrastructure Ministry of Transport, Saudi Arabia 7,199
New Jeddah Downtown Buildings Public Investment Fund (PIF) 4,800
New Energy Industrial City in Abqaiq Industrial Saudi Aramco 4,400
Al Faisaliah Housing and Administrative in Makkah Buildings Makkah Region Development Authority (MRDA) 4,000
Jizan Economic City (JEC) - Pure Terephthalic Acid (PTA) and
Industrial Pan-Asia PET Resin (Guangzhou) Co, Saudi Aramco 3,800
Poly Ethylene Terephthalate (PET) Production Plant
Saudi Arabian Mining Company (Maaden), Eastern
Waad Al Shimal Mining City -
Industrial Province, Mosaic Company, Saudi Basic Industries 3,200
New Phosphate Mine and Industrial Complex
Corporation (Sabic)
Offshore Marjan Oil and Gas Field Oil & Gas Saudi Aramco 3,000
Berri Increment Programme Oil & Gas Saudi Aramco 1,500
Redevelopment of East Wing of the Prophet’s Mosque Buildings Public Investment Fund (PIF) 1,200
Batterjee Medical City in Dammam Buildings Middle East Healthcare Company (MEAHCO) 1,070
Source: Ventures ONSITE Projects Intelligence Database: www.venturesonsite.comConclusion
The large budget indicates that KSA is
expecting significant revenue growth About Ventures
in the years to come. The Vision 2030,
NTP 2020 and private sector investment ONSITE
boost, and ongoing reforms are likely Ventures ONSITE, a product by Ventures
to be the growth drivers for KSA’s Middle East, has been a market leader in tracking
construction market in 2018 and beyond. construction projects across the Middle East and
According to Riyadh officials, KSA’s Africa region for more than 15 years. Ventures ONSITE
economy is entering a post-oil era in provides accurate and detailed information on completed,
which the kingdom’s mega-cities, which current, and future construction projects.
are under construction, will provide the
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