The value of Saudi awarded contracts maintained a steady pace of increased spending across the construction sector as approximately SR53.6 billion ($14.3 billion) worth of contracts were awarded during the second quarter of 2013.
A majority of the contracts were dominated by the real estate sector (residential and mixed-use) as it accounted for 39 percent of the total value of awarded contracts during Q2, 2013. Furthermore the real estate sector accounted for 30 percent of the value of awarded contracts during the first half of 2013.
The government sector played a significant role as it accounted for 19 percent of the value of awarded contracts during Q2. Contracts in the power, oil & gas and transportation sectors sustained the growth of the projects market by accounting for 23 percent of the total awarded contracts during Q2, 2013, according to a report by the National Commercial Bank.
The extended growth in the value of awarded deals during Q2 resulted in approximately SR102.7 billion worth of contracts during H1, 2013.
The NCB report said strength of the Saudi construction market is manifested by the exerted pressure borne by government and private sectors to diversify expenditures across all sectors. There was a 19 percent slip in H1 compared to H1, 2012, which registered an impressive SR126.7 billion worth of awarded contracts.
The geographical breakdown of awarded contracts by value reveals that the Makkah region captured the lion share of contracts.
The real estate sector was the main contributor to the Makkah region's 36 percent share as one of the contracts was a SR13 billion mixed-use real estate mega-project.
The Riyadh region captured a 20 percent share of awarded contracts by value, which was spurred by investments across most of the sectors.
The Eastern Province lacked the usual mega-projects that are commonly witnessed in the oil & gas, petrochemical and industrial sectors causing it to comprise a 14 percent share of the value of awarded contracts.
A number of significant contracts that were awarded by the Ministry of Interior led to healthy investments into the rest of the areas across the Kingdom.
April's value of awarded contracts reached a healthy SR23 billion. Approximately three contracts worth SR10.3 billion were awarded within the government sector as the Ministry of Interior continued with its plans to increase the number of security compounds in the Kingdom.
The first contract was awarded to the Saudi Binladin Group for the development of the King Abdullah Project's (KAP 3's) third phase.
The SR3.8 billion contract calls for Saudi Binladin to construct 620 security compounds across various regions in addition to building 15 call centers and associated facilities.
The project is expected to be completed by the second quarter of 2016. KAP 4, which was the second contract that was awarded by the Ministry of Interior went to Al Rashid Trading Contracting Company.
This phase of the project was worth SR3.8 billion and involved the construction of 13 sport recreational facilities along with planned dormitories across various areas. The project is expected to be completed by the third quarter of 2016.
As for the third contract, which was package 2 of the fourth phase, the Ministry of Interior awarded it to Al Arrab Contracting Company in the amount of SR2.8 billion. Al Arrab will be tasked with constructing 8 sport recreational facilities and dormitories. The project is expected to be completed by the second quarter of 2016.
The oil & gas sector had two contracts that were awarded during April, reaching SR3.4 billion. The first of the two contracts was awarded by Saudi Aramco to Samsung Engineering to boost the capacity of the Riyadh refinery. The SR2.6 billion project will call for Samsung Engineering to build four new processing plants for the isomerization, naphtha splitting sulfur guard-bed and the diesel hydrotreater reactor. Additional work includes two debottlenecking operations on the hydrocracker and the gas concentration unit, and the replacement of crude and vacuum distillation tower internals. The project is expected to be completed by the third quarter of 2016. The second contract was awarded by Saudi Aramco Lubricating Oil Refining Company (Lubref) to Samsung Engineering for expanding the propane deasphalting unit (6,000 barrels per day) at the Yanbu Refinery. The SR750 million contract is expected to be completed by the second quarter of 2015.
Within the residential real estate sector, a majority of the approximately SR2.8 billion worth of contracts were awarded by the Ministry of Housing. The Ministry of Housing awarded five contracts as part of the infrastructure development to accommodate a portion of the targeted 500,000 homes that were mandated by King Abdullah bin Abdulaziz. Mohammed Ali Al Swailem Group was the recipient of the first two packages of the first phase as it was awarded approximately SAR814 million for the two contracts. Package one calls for the development of infrastructure works for more than 3.7 million square meters across various areas within the Kingdom. Package two calls for the development of 380,000 square meters of infrastructure work.
The third package that was awarded by the Ministry of Housing went to Saudi Turais Company in the amount of SR308 million. The infrastructure development will encompass approximately 1.4 million square meters across the Kingdom. The fourth package was awarded to Abdulaali Al Ajmi Company in the amount of SR926 million. Package four entails the infrastructure development of approximately 3.7 million square meters. All four packages are expected to be completed by the second quarter of 2015.
The Ministry of Housing also awarded a contract to Abdullah A. M. Alkhodari in the amount of SAR780 million for the completion of infrastructure works at various sites. Work on the project is expected to be completed by the third quarter of 2014. Within the mixed-use real estate sector, a contract was awarded by the Zaki MA Farsi Group to Specialized Contracting Company for the construction of the Farsi Seven Towers. The development, which will be located in Jeddah, will consist of two buildings with 130 apartments, four penthouses, 16 retail outlets and a gym. The value of the contract is SR503 million and is expected to be completed by the second quarter of 2016.
Approximately SR2.4 billion worth of contracts were awarded within the power sector as the Saudi Electricity Company (SEC) and the Royal Commission for Jubail & Yanbu (RCJY) initiated several projects. SEC awarded nearly SAR1.7 billion worth of contracts. The most notable contract was awarded to Middle East Engineering & Development to construct a 380 kilovolt (kV) and 132kV overhead line. RCJY's most notable contracts that were worth SAR967 million, were for the construction of two power plants in Ras Al Khair. Two companies, Saudi Services for Electro-Mechanical Works and Al-Babtain Contracting, will each build 1,500 megawatt electricity power plants in addition to the construction of buildings and amenities for the plants. The two projects are expected to be completed by the third quarter of 2016.
May's value of awarded contracts dipped as approximately SR9.8 billion worth of contracts were awarded. The residential real estate sector garnered the highest value of awarded contracts, capturing SR3.7 billion.
The value of awarded contracts rebounded in June to reach SR20.8 billion. The mixed-use real estate sector accounted for nearly 63 percent of the total value of awarded contracts with a single mega-project award in Makkah. The Ministry of Finance awarded the SR13 billion contract to the Saudi Binladin Group as part of the government's efforts to attract and enhance its religious tourism.