meed-logo

line1 line2 line3
SIGN IN / REGISTER

Bigger is better for construction

23 December 2024

 

Nothing encapsulates a buoyant construction market better than signing a contract to complete the world’s tallest tower. That happened on 2 October 2024, when Saudi Binladin Group (SBG) was awarded a $2bn contract to complete the 1,000-metre-plus Jeddah Tower.

The award was significant in many ways. It was a revival of the tower project, which has been on hold since 2018, and it was also a comeback for SBG after years of financial stress that had led many in the market to think it would never win another major construction deal.

On a macro level, the construction deal confirmed that the region is home to the world’s most daring and challenging construction projects.

More importantly, these projects are more than just aspirations; they are real projects that are being built.

Biggest contracts

While Jeddah Tower was the most symbolic contract award in 2024, at $2bn, it was not the largest. That accolade went to the Italian contractor WeBuild when it was awarded a $4.7bn contract for the construction of the three dams at the Trojena mountain resort at Neom in January. 

Like Jeddah Tower, the project is a challenging one. Time pressure is a key issue. Trojena has been selected to host the 2029 Asian Winter Games, and the reservoir will be used to make the snow for the event. This means the dams must be completed and the reservoir filled well in advance.  

The project is also technically complex. The main dam will have a height of 145 metres and will be 475 metres long at its crest. Inside the reservoir there will be a kidney-shaped dam that will house an attraction known as the Enchanted Forest, which will be connected to the rest of the Trojena development by an underwater tunnel.

WeBuild’s involvement also highlighted that international contractors, after sitting on the sidelines for a number of years, are playing an active role in the Saudi construction market. 

One market segment that has attracted strong interest is building stadiums, which like Trojena have to be completed for football tournaments with fixed dates: the 2027 Asian Games and the 2034 Fifa World Cup. 

In October, Spain’s FCC in joint venture with the local Nesma & Partners secured a $1bn contract to build the Prince Mohammed Bin Salman Stadium at the Qiddiya City development on the outskirts of Riyadh.

Earlier in the year, a joint venture of Belgian contractor Besix and the local Albawani was awarded the contract to build the Aramco football stadium in Al-Khobar, and Beijing-headquartered China Railway Construction Corporation and local contractor Sama Construction for Trading & Contracting won the contract to construct the Jeddah Central stadium project.

Outside of Saudi Arabia, there were only two contract awards valued at over $1bn and both were in the UAE emirate of Abu Dhabi. 

In January, a $1.2bn contract to complete phases two and four at the Saadiyat Lagoons project was awarded to a joint venture of two Abu Dhabi-based contractors, Trojan Construction Group and Arabian Construction Company. 

The other $1bn-plus deal was a $1.4bn contract to complete dredging and marine works for the Nisi Island development, which was awarded to the local NMDC Group. 

These deals were highlights in what was a strong year for the rest of the market. In total, according to regional projects tracker MEED Projects, there were $67.9bn of construction contract awards by the end of October 2024. If the trajectory is maintained until the end of the year, it will result in about $81.4bn of awards, which is lower than the $96.9bn of awards recorded in 2023, but still higher than any of the eight years from 2015 to 2022. 

Market challenges

Replicating the record-breaking performance of 2023 was never going to be easy, especially after Riyadh warned that its spending would be more targeted at the end of 2023. Those comments, made by the finance minister, set the tone for 2024, which proved to be a year with plenty of contract awards, but without the apparent carefree attitude to spending that characterised 2023. 

The other challenge with following on from a bumper year is supply chain constraints. With full order books, contractors and suppliers have lost some of the appetite that they had for new work in 2023. The result of this for project clients has been difficulties in attracting enough bidders, and when bids are submitted, the offers are often not competitively priced.

These challenges have been felt most acutely by projects in the remote regions of Saudi Arabia. The issue is so prevalent at Neom that there is now a phenomenon known as ‘Neom inflation’, which implies that the $500bn gigaproject in the remote northwestern corner of the kingdom has its own unique inflation rate.

These regional issues have added to the international supply chain constraints that have been felt since the Covid-19 pandemic and, more recently, during the conflict in Gaza and threats to shipping lanes in the Red Sea.

Addressing challenges

The market has responded to these challenges. In Saudi Arabia, the Public Investment Fund (PIF) invested in four of the kingdom’s largest general contractors in 2023. Then, in February 2024, the sovereign wealth vehicle announced that it had, together with the National Infrastructure Fund, introduced a new contractor financing programme, designed to strengthen the construction sector’s finances. 

The programme aims to provide contractors with finance solutions to help improve their cash flows.

Developers have also been improving their contract terms and, crucially, working to ensure payments are processed on time – a move that should also help improve contractor cash flows. 

The PIF-backed development companies have also been actively working on attracting new companies to Saudi Arabia. They have been travelling the world on roadshows to attract more contractors and suppliers to projects in the kingdom. 

These roadshows have been highlighting the volume and scale of the opportunities in Saudi Arabia, and have shown that the kingdom offers long-term opportunities for companies that come and invest in the market. 

In the UAE, Abu Dhabi has invested heavily in its construction supply chain. With its government-controlled investment vehicles and a series of interconnected mergers and acquisitions, Abu Dhabi and its ruling family now own the emirate’s key contracting companies and the suppliers of vital raw materials such as cement and steel. 

These national champions shield Abu Dhabi from many, but not all, supply chain challenges that have impacted projects in other markets.

Meanwhile, in Dubai, where the real estate market is driving construction, private sector developers are courting contractors to work on their projects.

As private entities, they are not bound by the procurement regulations that government or government-controlled developers have, so they have been offering directly negotiated deals to help guarantee that their projects are delivered on time.

 

2025 outlook

Unless the market dynamics shift dramatically, the market will likely face many of the same challenges in 2025. 

One of the overriding fears is a sharp slowdown in project spending in Saudi Arabia. This has happened before and is a valid concern, and the market has already shown signs of plateauing in some areas. 

This is most noticeable when contract awards for the five official gigaprojects – Diriyah, Neom, Qiddiya, Red Sea Global and Roshn –  are examined. After a sharp ramp-up in awards from 2020 to 2023, the pace of contract awards levelled off in 2024, which reflects budgetary concerns within the development companies and the PIF, and the market’s ability to take on such large volumes of new work. 

With budgets under pressure, developers in Saudi Arabia are increasingly looking for investment to help fund their projects. The success of these efforts will determine how buoyant the market in the kingdom remains over the long term.  

Even if investment comes in, it will take time, which means there will likely be a degree of conservatism from development companies in 2025. This was signalled in mid-November, when Neom, while announcing the exit of CEO Nadhmi Al-Nasr and the appointment of Aiman Al-Mudaifer as acting CEO, said: “As Neom enters a new phase of delivery, this new leadership will ensure operational continuity, agility and efficiency to match the overall vision and objectives of the project.”

While there may be a pause in spending on some of the Saudi gigaprojects, other schemes continue to underpin the performance of the construction market. 

Oil prices remain supportive of government spending on projects across the Gulf, and for the private sector, in markets such as the UAE, real estate projects continue to move into construction as developers rush to deliver units to investors and capitalise on the ongoing strength of the property market. 

https://image.digitalinsightresearch.in/uploads/NewsArticle/13146583/main.gif
Colin Foreman

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

Click here to register
Exclusive from Meed
Related Articles
  • Syria seeks interest for $1.16bn Euphrates dam

    7 October 2026

    Register for MEED’s 14-day trial access 

    Syria’s Ministry of Energy has invited expressions of interest (EoIs) for the development of the Halabiyeh-Zalabiyeh dam project on the Euphrates River.

    The project has an indicative total cost of $1.16bn, according to the ministry’s EoI document. This includes $433.7m for the dam and hydropower plant and $729.6m for the pumped-storage power plant (PSP). 

    The scheme includes an 81MW hydroelectric power plant and a pumped-storage facility with a capacity of up to 1,200MW. The project will also include the construction of the dam and associated water-storage infrastructure. 

    The ministry seeks interest from qualified local and international companies, investors and other entities. Interested parties can participate in studies, design, financing, construction, and operation and maintenance of the project. 

    The ministry is considering several potential development structures, including build-own-operate-transfer, build-operate-transfer and public-private partnership models, as well as an engineering, procurement and construction (EPC) structure. It has said it is also open to proposals covering consultancy and financing services.

    The EoI covers several stages, including pre-feasibility and feasibility studies, financing and bankability studies, detailed and executive design, EPC execution, and operation and maintenance.

    The technical specifications envisage a 23-metre-high dam with a reservoir storage capacity of about 219 million cubic metres.

    The hydropower plant will have three generating units, while the 1,200MW PSP will have 3.5 hours of storage capacity and four reversible units.

    The deadline for submitting EoIs is 10 November, with enquiries accepted until 26 October.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20336025/main.jpg
    Mark Dowdall
  • Arada launches UAE construction arm with Roberts

    7 October 2026

    Register for MEED’s 14-day trial access 

    UAE developer Arada has integrated Australian contractor Roberts into the UAE market as part of its wider business strategy.

    Arada acquired Roberts in 2025 after entering the Australian market. The tier-one contractor delivers projects in the healthcare, education, commercial, residential, hospitality, industrial, life sciences and defence sectors.

    At the time of the acquisition, Arada said it planned to invest about $20m in Roberts. The investment is intended to give the developer greater control over the delivery of its Australian projects and support Roberts’ expansion into markets including the UAE.

    Arada has said it could invest up to $100m in Roberts’ expansion into new sectors and markets. The company is targeting $1bn in annual revenue from Roberts by 2028.

    Roberts has established a UAE office, with a head office team already in place. Arada said the contractor’s capabilities will support the delivery of its high-rise residential and social infrastructure projects.

    The contractor’s first UAE project will be phase two of Arada Central Business District, a commercial development within Aljada in Sharjah. Arada is developing the AED35bn ($9.5bn) mixed-use project.

    Roberts is also providing preconstruction services for several Arada projects in Dubai and Sharjah, ahead of starting site work.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20334926/main.jpg
    Yasir Iqbal
  • Expo Riyadh sets October deadline for Saudi Arabia pavilion

    7 October 2026

     

    Expo 2030 Riyadh Company (ERC), tasked with delivering the Expo 2030 Riyadh venue, has set a deadline of 25 October for bids for a contract to build the Saudi Arabia pavilion.

    The tender was issued on 19 May, with an initial bid submission deadline of 26 August.

    The pavilion is a major asset located within the KSA District on the eastern side of the Expo 2030 Riyadh masterplan, in the Loop of Nations district.

    Construction activity at the Expo site is accelerating, with Riyadh moving to award its first major vertical contracts and advancing infrastructure works across the programme.

    Last month, MEED reported that ERC had received contractor interest on 14 September for a contract to design and build a convention centre in the site’s Collaboration District.

    ERC also tendered a contract to deliver the Souq areas within the Expo site, as MEED exclusively reported on 8 September.

    These areas are divided into five precincts, with a total development area of about 300,000 square metres.

    Also in September, Saudi Arabia’s Royal Commission for Riyadh City awarded a design-and-build contract to construct a new metro station serving the Expo 2030 site.

    In April, ERC awarded two contracts for the next phase of infrastructure works at the site to local firm Al-Yamama Company.

    The scope covered the construction of road networks and infrastructure for water, sewage, electricity, telecommunications and electric vehicle (EV) charging.

    These awards followed ERC’s January award of an estimated SR1bn ($267m) contract for initial infrastructure works at the site to local firm Nesma & Partners.

    That scope covered about 50 kilometres of integrated infrastructure networks, including internal roads and essential utilities such as water, sewage, electrical and communications systems, as well as EV charging stations.

    The masterplan covers 6 square kilometres, making it one of the largest sites ever designated for a World Expo event. Situated north of the Saudi capital, the site will be near the future King Salman International airport and will provide direct access to Riyadh landmarks.

    The Public Investment Fund, Saudi Arabia’s sovereign wealth vehicle, launched ERC – a wholly owned subsidiary – in June 2025 to build and operate facilities for Expo 2030.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20334856/main.jpg
    Yasir Iqbal
  • Kuwait on track to hit oil production target

    7 October 2026

    Kuwait is on track to meet its target of having 4 million barrels a day (b/d) of oil production capacity by 2035, according to Kuwait Petroleum Corporation (KPC) chief executive Shaikh Nawaf Al-Sabah.

    Al-Sabah also said Kuwait is on course to increase non-associated gas production to 2 billion cubic feet a day by 2040.

    His comments come amid an ongoing crisis in Kuwait’s oil and gas sector linked to the regional conflict that began when the US and Israel attacked Iran on 28 February.

    The subsequent war has significantly disrupted shipping through the Strait of Hormuz, which is a crucial export route for Kuwaiti crude oil.

    Kuwait is currently producing around 2 million b/d of oil, down from 2.6 million b/d before the US and Israel attack.

    Speaking at a conference in London, Al-Sabah said: “We have the capacity to go back up to our current maximum sustainable capacity of 3 million b/d, if we have the export routes available, and this comes down to the ability to move oil through the Strait.”

    KPC is investing $9bn-$10bn a year in capital expenditure to meet its oil and gas production goals, according to Al-Sabah.

    He said: “We are doing this because we recognise that it is our hydrocarbons that will be most in demand a decade from now, and two decades from now – in fact, for the rest of our lifetimes.”

    Project Seef

    KPC is pushing ahead with the Al-Seef project, which focuses on developing three large offshore oil discoveries, Al-Sabah said.

    The offshore fields are known as Nokhatha, Julaia and Jazza. The development was first announced in February this year, about two weeks before the US and Israel attack on Iran.

    Al-Sabah said KPC is continuing with the project and believes the three fields collectively hold more than 3 billion barrels of recoverable oil.

    He said: “We are asking international oil companies to partner with us to develop those resources under an operating services contract.

    “So, we’re moving ahead according to the exact same schedule that we had put together even before the war began.”

    Al-Sabah did not say which international oil companies KPC has approached to help develop the three offshore fields.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20315147/main.jpg
    Wil Crisp
  • Roshn plans new flagship development in Riyadh

    7 October 2026

     

    Saudi developer Roshn Group plans to develop its next flagship scheme in north Riyadh, spanning an area of 13.7 square kilometres. 

    Roshn is looking to appoint lead design consultants to deliver detailed design, tender documentation and construction documents across the scheme, known as Plot 1.

    The scope covers all infrastructure, utilities, public realm works and site adaptation of Roshn’s residential prototypes, split across two work packages.

    Part 1 covers phases A, B and E, which collectively span about 7.8 million square metres (sq m) and will comprise 17,000 units.

    Part 2 includes phases C and D, which will span about 4.7 million sq m and comprise more than 15,000 units.

    The development is bordered by Expo 2030, King Abdulaziz Park, the Sports Innovation Lab Zone and the National Housing Company-developed Khozam district.

    It will be a residential-led mixed-use development, also featuring retail, offices, hospitality, education and civic facilities.

    Connectivity is a core plank of the masterplan, with two metro stations planned: one at the existing Line 4/proposed Line 7 interchange and another dedicated Line 7 stop. The scheme would also be served by the future Qiddiya high-speed rail and a possible King Salman Road diversion.

    Plot 1 builds on Roshn’s existing footprint in the capital, notably the multi-phase Sedra community, as the developer expands beyond single-family housing into mixed-use districts under its Roshn 3.0 strategy.

    Last month, Roshn Group announced that it had signed a preliminary agreement with Talaat Moustafa Group (TMG) Saudi, the local subsidiary of Egyptian developer Talaat Moustafa Group, to establish a joint venture to explore and develop a mixed-use project in Riyadh.

    Under the agreement, TMG will hold a 51% stake in the joint company, while Roshn Group will hold 49%.

    The agreement sets out a framework for the two groups to assess a potential partnership for the project’s phased development, which is planned as a residential-led, mixed-use community featuring retail, commercial, hospitality, leisure, healthcare and education facilities, alongside parks and public spaces.

    Roshn Group and TMG Saudi plan to conduct detailed master planning and develop the project’s business case.

    Preliminary studies indicate the development could include more than 55,000 residential units across all phases.

    Roshn Group did not disclose the exact project location in its announcement.

    As a Public Investment Fund-owned developer, Roshn remains a key vehicle for delivering Vision 2030’s housing programme, which targets 70% Saudi home ownership, alongside the kingdom’s wider quality-of-life and economic diversification agendas.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/19786131/main.jpg
    Yasir Iqbal