meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi construction needs more clarity

23 May 2025

Commentary
Colin Foreman
Editor

Saudi Arabia’s construction market finds itself in a quandary in 2025.

The announcement of Vision 2030 in 2016 was followed by a steady stream of gigaproject launches and unprecedented media coverage of the Saudi construction market. The hype delivered, and as those projects moved on site, there were record levels of contract awards in 2023 and 2024.

During the first quarter of 2025, however, the finance ministry has confirmed a 19% drop in capital expenditure, and data from regional projects tracker MEED Projects shows that the total value of construction and transport contract awards was $17bn – a 50% drop when compared to the first quarter of 2024.

The drop in awards follows reports last year of a reprioritisation of projects in the kingdom. Although this process has been publicly mentioned by officials, details have not been communicated. The assumption is that event-related schemes such as those for Expo 2030 and the 2034 Fifa World Cup will be the top priority, but this has not been officially confirmed.

The air of uncertainty has left the construction industry unsure about which projects will move ahead, and this risk is either being priced into tender returns or is leading companies to sit on the sidelines until more clarity can be gained.

Saudi Arabia still offers a lot of opportunities for the construction sector, but for that potential to be fully realised against a backdrop of lower oil prices and budget cuts, it needs to function as efficiently and as effectively as possible. This will not be possible until the priority projects have been officially identified.

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/13939006/main.gif
Colin Foreman

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Iraq maintains its pace, for now

    29 May 2025

    Commentary
    John Bambridge
    Analysis editor

    Iraq faces economic challenges amid lower oil prices and global shocks that raise concerns over Baghdad’s ability to maintain its heightened spending trajectory – even as that spending is supporting project and non-oil growth.

    With a Brent crude oil price around the $64-a-barrel mark, and with a budget breakeven price point closer to $110 under the government’s expansionary 2023–25 budget, Iraq is on course to rack up a deep deficit in the near term. Yet given Baghdad’s junk-rated credit, any fiscal course that risks drawing the government closer to external financing is perilous.

    At the same time, Iraq has infrastructure ambitions that will only be realised if the country maintains its near-term capital investments, so for now that remains the course. Indeed, the heightened spending – alongside external investment – is creating significant buoyancy in the projects sector.

    Iraq’s oil, gas and chemicals project market in particular has surged to its highest value in a decade, reaching $152.2bn as of May 2025, while the value of projects under execution in the sector has risen to a record $93.3bn.  

    The resilience of Iraq’s energy sector comes despite political and security challenges. Even as firms like Shell and ExxonMobil have exited the market, citing operational difficulties, the UK’s BP has invested heavily in reviving Kirkuk’s oil fields, and France’s TotalEnergies is working to develop and upgrade the southern Ratawi field through its Gas Growth Integrated Project. 

    In the power sector, several of the country’s biggest projects have advanced to the execution stage in recent months, with Iraq signing preliminary deals to build and upgrade up to 38GW of gas power capacity in the country.

    Chinese firms have meanwhile signed engineering, procurement and construction contracts for more than $20bn of energy and power schemes since the start of 2024.

    In the broader general contracting sector, there are $78bn-worth of planned projects, including $54bn in the construction sector and $24bn in the transport sector. This project activity is being supported by significant budget commitments – $42bn in 2024 – into infrastructure and housing.

    The strength of the project activity in the market is such that it helps mask the fiscal trouble stalking the government. Soon, however, Baghdad will either need to check its outlays or court disaster. Structural reforms – either to tackle runaway running costs on wages and pensions or to generate fresh tax revenue – present unpalatable options for the fragile coalition government.

    Baghdad will be hoping the oil price improves, and that the energy, power and logistics infrastructure being developed will provide enough of a productivity boost to set the whole country on a more positive growth footing.

     

    MEED’s June 2025 report on Iraq includes:

    > GOVERNMENT & ECONOMY: Iraq’s economy faces brewing storm
    > OIL & GAS: Iraqi energy project value hits decade-high level
    > OIL & GAS: Revival of Syrian oil export route could benefit Iraq
    > POWER: Iraq power sector turns a page
    > CONSTRUCTION: Iraq pours billions into housing and infrastructure projects
    > DATABANK: Iraq forecast dips on lower oil prices

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13956725/main.gif
    John Bambridge
  • Iraq forecast dips on lower oil prices

    29 May 2025

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13974135/main.gif
    MEED Editorial
  • May 2025: Data drives regional projects

    29 May 2025

    Click here to download the PDF

    Includes: Commodity tracker | Construction risk | Brent Spot Price | Construction output

    MEED’s June 2025 report on Iraq includes:

    > COMMENT: Iraq maintains its pace, for now
    > GOVERNMENT & ECONOMY: Iraq’s economy faces brewing storm
    > OIL & GAS: Iraqi energy project value hits decade-high level
    > PIPELINES: Revival of Syrian oil export route could benefit Iraq
    > POWER: Iraq power sector turns a page
    > CONSTRUCTION: Iraq pours billions into housing and infrastructure projects

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/13974082/main.gif
    MEED Editorial
  • Ashghal holds meeting with contracting firms

    29 May 2025

    Qatar’s Public Works Authority (Ashghal) held a meeting earlier this week with senior executives of contracting companies operating in Qatar to enhance its cooperation with the private sector.

    Senior ranking officials from Qatar Chamber also attended the meeting.

    The meeting follows Ashghal’s announcement of plans to implement a range of infrastructure projects between 2025 and 2029.

    Earlier this month, Ashghal introduced financial measures worth QR21bn ($5.8bn) to support the country’s contracting sector. These measures include direct payments, easing of financial burdens, substitution of maintenance reserves with bank guarantees on advanced projects, contract extensions and enhanced contractor performance evaluations.

    Last month, Ashghal announced a five-year plan valued at about QR81bn ($22bn). The plan covers a range of infrastructure projects to be implemented between 2025 and 2029.

    The plan’s most important project is the strategic outfalls project, which will be launched this year. The project will be developed in two phases and aims to reuse stormwater for irrigation and cooling in the northern and southern areas of Doha.

    According to local media reports, the project’s tunnelling work will begin this year, followed by sub-tunnelling in early 2026.

    The media reports, quoting Ashghal president Mohammed Bin Abdulaziz Al-Meer, added: “The projects range from the development of public lands and government building projects catering to health, education, sports and culture to sewage networks and strategic outfalls, including strategic tunnels, pumping and treatment stations to reduce flooding and enhance the efficiency of the national network.”

    Ashghal has also outlined plans to tender several public-private partnership (PPP) projects, including infrastructure works for over 5,500 residential plots across multiple locations.

    Ashghal is also considering a PPP framework for the second phase of the wastewater treatment plant in Al-Wakra and Al-Wukair.

    In March, MEED reported that Ashghal had outlined plans to undertake 135 projects as part of its development strategy for 2025. 

    The upcoming projects, which have been budgeted to be tendered quarterly, cover sectors including buildings, highways, roads and drainage.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13972612/main.jpeg
    Yasir Iqbal
  • Roshn breaks ground on Aldanah Dhahran project

    29 May 2025

    Public Investment Fund-backed real estate developer Roshn Group has broken ground on its Aldanah community, a new mixed-use development in Dhahran in the kingdom’s Eastern Province.

    The project will cover over 1.7 million square metres and feature 2,000 housing units, which are expected to accommodate about 10,000 residents.

    The project will be located close to King Abdulaziz Road in Dhahran.

    Aldanah is Roshn’s sixth development in the kingdom and second in the Eastern Province after the Alfulwa community in Al-Ahsa.

    In May last year, MEED reported that Roshn Group had awarded a SR2.89bn ($770m) construction contract to the local contractor Building Construction Company for the Aldanah project.

    The contract scope covers the development, design and infrastructure works for 1,962 residential units in the Aldanah community.

    Building Construction Company is a subsidiary of local real estate developer Retal Urban Development Company.

    The duration of the contract is 45 months from the start date of the land handover from the client to the contractor.

    The project is set for completion by 2028.

    Created in 2018, Roshn aims to increase homeownership rates among Saudi citizens to 70%.

    The company plans to develop more than 395,000 residential units in Riyadh, Mecca, Asir and the Eastern Region.

    Roshn is developing the Sedra community in northeast Riyadh. The community is masterplanned to include 30,000 homes built in eight phases.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13972592/main.jpg
    Yasir Iqbal