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Saudi Arabia to Become World’s Largest Construction Market by 2028

Saudi Arabia is on its way to become the world’s biggest construction market by the end of 2028, according to a report by the global real estate consultancy Knight Frank.

This comes as the Kingdom pours investments into promising projects that aim to overhaul and diversify its economy, in line with its ambitious Vision 2030, which focuses on 3 main pillars: a vibrant society, a thriving economy, and an ambitious nation.

Promising Figures

In its Construction Landscape Review—H1 2024 report, published on Monday, the London-based firm projected that Saudi Arabia’s total construction output value will reach $181.5bn by the end of 2028. Therefore, it will increase almost 30% from 2023 levels.

According to Knight Frank’s report, the output value for the sector reached $141.5bn in 2023. This is due to the Kingdom’s investments in the residential, institutional, infrastructure, industrial, energy and utilities, and commercial sectors.

Residential Sector

The report revealed that the residential sector had the biggest share of the output value, with 31% ($43.5bn) of the total output value in 2023. It projected that the value of the residential sector will hit $56.9bn by 2028.

Saudi Arabia to Become World’s Largest Construction Market by 2028
Construction output value-Knight Frank report

Moreover, the energy and utilities sector accounted for $35.1bn in 2023. Hence, the report projected that this sector’s value will reach $46.5bn by 2028.

Historical Transformation

Mohamed Nabil, regional partner and head of Project and Development Services for the MENA region at Knight Frank, praised the positive transformation experienced in the construction sector in Saudi Arabia. “We are currently witnessing a historical transformation unfolding in Saudi Arabia with construction projects standing out in their design scale and value,” he said.

“Given the scale of the development pipeline, the government is hoping to attract more than $3tn in investments by 2030, a figure recently confirmed by the Minister of Investment during the inaugural Sino-Gulf Cooperation for Industries and Investments Forum in China last month,” Nabil added.

Since the introduction of Vision 2030 in 2016, the Kingdom has launched projects worth more than $1.25tn. As part of the revolutionary Vision 2030, it aims to deliver over 600,000 residential units, more than 320,000 hotel keys, as well as  over 6.1 million square meters of new office space.

Giga-Projects

Under Vision 2030, Saudi Arabia has embarked on a number of giga-projects, especially in the Western region of the Kingdom. According to Knight Frank’s report, there are currently 25 giga projects at various phases of construction across Saudi Arabia. This is led by projects like NEOM, The Line, Diriyah Gate, in addition to the newly announced Qiddiyah project.

The Kingdom’s Western region is a focus of development with plans valued at $692bn, accounting for 55% of the total $1.25tn development plan. Furthermore, the region is expected to witness an expansion in luxury residential supply, hotel accommodation, retail, and office space.

In this regard, Amar Hussain, associate partner for research at Knight Frank, said: “Giga-projects are undoubtedly transforming the Kingdom’s urban landscape. Arguably, one of, if not the most expansive, real estate development programs ever seen in the world is gathering pace in Saudi Arabia as the 2030 deadline nears to realize Vision 2030.”

Riyadh Dominates

Saudi Arabia to Become World’s Largest Construction Market by 2028
Value of contract awards- Knight Frank report

The capital city, Riyadh, has gained the lion’s share of the construction contracts awarded in 2023. It currently accounts for 38% of contract award value, worth of $54mn. Provinces of Makkah and Tabuk follow Riyadh, with $28.7mn and $28.5mn, respectively.

This comes as the Kingdom aims to grow its population to 10 million by 2030. Riyadh has seen an increase in activity as Saudi Arabia is getting ready to host World Expo 2030 and possibly the World Cup 2034.

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