The Saudi construction market, which captures 40 percent of the GCC market, is expected to award construction projects worth $90 billion (SR 337.5 billion) in 2014, local media said quoting a study prepared by a British financial firm.
The study, disclosed at the Big Five International building & Construction Show, Dubai, said the value of the projects, being implemented or planned in the Kingdom, is estimated at $700 billion (SR 2.6 trillion).
The Kingdom was represented at the show by the Saudi Export Development Authority (SEDA), an affiliate of the Ministry of Commerce.
The construction sector in the Kingdom is considered the biggest in the Middle East region thanks to huge government spending on infrastructure projects which will lure foreign investors to set up new firms or enter into joint ventures (JVs) with local companies in a bid to avail new projects in the Saudi markets which are currently estimated at $40 billion (SR150 billion), the study said.
However, the building and construction sector in the Kingdom is encountering a series of challenges, notably the Saudization (localization) of jobs and shortage of technical cadres for the implementation of projects and absence of legislation which will negatively affect performance and non-compliance to standards, the 44-page study said.
The building and construction sector in the Kingdom witnessed a growth rate of 4.7 percent in 2012 and poised to grow to 6.4 percent in 2014, it said.
On the other hand, the rate of expansion in construction costs slowed down in 2012 due to long bidding processes. The consumption rate of steel and cement was, however, projected to increase by 8.5 percent and 22 percent, respectively, in 2013, the study said.
With $2.87 trillion of projects currently in the planning or construction phase, the Middle East region offers unlimited business opportunities, with the Gulf countries representing the most active markets, according to data released by the show organizers.
They say a thriving trading environment, ease of doing business and consistent demand for innovative products and project solutions, from construction through to fit-out, make the GCC an attractive proposition for local and international companies looking for new market opportunities.