Meed | China construction at pivotal juncture

China construction at pivotal juncture

5 March 2025

This package also includes: Chinese firms dominate region’s projects market

China’s construction industry remains one of the largest in the world, reflecting its ongoing urbanisation and development initiatives.

Over the past 10 years, the industry has experienced significant growth, with robust public investment and an acceleration of infrastructure projects. In 2024, China’s construction market was estimated to grow by about 4% in real terms, driven by substantial investments in the infrastructure and energy sectors, according to GlobalData.

Decisive moment

In 2025, China’s construction industry stands at a pivotal juncture, poised for growth yet facing a range of challenges. The industry must navigate a complex landscape of regulatory changes, market saturation and economic shifts.

The infrastructure sector is a cornerstone of China’s construction growth, with output expected to reach $1.2tn by 2027, growing at a compound annual growth rate (CAGR) of 8.5%. The growth in the infrastructure market is fuelled by government plans to build 25,000 kilometres of highways, 3,000km of railways and 30 civil airports by 2026. These initiatives aim to enhance connectivity and support economic development, aligning with China’s long-term vision of establishing a comprehensive transport network by 2050.

The commercial construction sector is projected to grow at a CAGR of 8.5%, reaching $430bn by 2027. This growth is driven by increased domestic tourism and robust retail activity.

Industrial construction is anticipated to grow at a CAGR of 7.6%, reaching $370bn by 2027. This growth is propelled by advancements in high-tech manufacturing and the burgeoning demand for new energy vehicles.

The energy sector is projected to grow at a CAGR of 7.4%, reaching $1tn by 2027. Government initiatives to enhance energy generation and storage capacities, including investments in renewable energy, are key drivers of this growth.

Real estate

Despite ongoing urbanisation and housing demands, the residential sector is estimated to grow at a slower CAGR of 4.1%, reaching $1.4tn by 2027. The sector faces challenges such as falling new home prices, declining property sales and rising debt among property developers.

Chinese contractors also face challenges arising from regulatory and policy changes. The government has tightened regulations on property purchases and financing to stabilise the housing market, which could lead to reduced liquidity for construction companies. The implementation of stricter environmental regulations further complicates project execution, as contractors must invest more in sustainable practices and technologies to comply with new standards.

Chinese construction firms are increasingly turning to international markets to diversify their operations

Rising costs of construction materials and supply chain disruptions are another challenge. Global inflation and geopolitical tensions have led to increased prices for essential materials such as steel, cement and timber.

As the Chinese economy shifts towards technology and automation, labour shortages are a growing concern. Fewer workers are entering the construction sector, resulting in a shortage of skilled labour, which can delay project timelines and increase labour costs.

Market dynamics are another factor. After years of rapid growth, China’s construction market is highly competitive, with numerous players vying for limited projects.

Competition can lead to aggressive bidding practices, resulting in reduced profit margins for contractors. Market saturation in certain regions means that contractors must continually innovate and differentiate their services to secure contracts.

Chinese construction companies are increasingly turning to international markets to diversify their operations and tap into emerging opportunities. This expansion is driven by the need to mitigate domestic challenges and leverage China’s substantial construction expertise.

As well as the Middle East, key overseas markets include Southeast Asia with countries such as Indonesia, Vietnam and the Philippines significant markets for Chinese construction firms. The Belt and Road Initiative (BRI) has facilitated numerous infrastructure projects in these countries, including highways, railways and energy facilities. These projects enhance regional connectivity and economic growth, aligning with China’s strategic interests.

Chinese construction firms have established a strong presence in various African nations, engaging in large-scale projects such as roads, bridges and energy plants.

Complex landscape

Chinese construction companies face several challenges in the international landscape. Navigating local laws and regulations can be complex, often requiring partnerships with local firms. Understanding and complying with diverse regulatory environments is crucial for successful project execution.

Political instability in certain regions can pose risks to project completion and profitability. Chinese firms must assess and manage these risks to ensure the viability of their international ventures.

Local and international competitors create a challenging environment, necessitating competitive pricing and innovative solutions.

Chinese firms must differentiate themselves through quality, efficiency and technological innovation to secure contracts.

Chinese firms dominate region’s projects market

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Colin Foreman

Exclusive from Meed

Saudi Arabia raises electricity tariffs
26 October 2026
Dubai Municipality confirms AED3bn Tasreef drainage awards
26 October 2026
Nakheel awards $259m Dubai Islands buildings contract
26 October 2026
Morocco plans second high-speed rail phase to Agadir
26 October 2026
Riyadh tenders King Salman Stadium works
26 October 2026

Saudi Arabia raises electricity tariffs
26 October 2026

Saudi Energy, formerly Saudi Electricity Company, has announced revised electricity tariffs, which will take effect on 1 January 2027.

The revised tariff schedule, published on the company’s official website, covers residential, commercial, industrial, agricultural, charitable and government customers.

The largest percentage increase in consumption rates is 16.7%, for residential customers using up to 6,000 kilowatt-hours (kWh) a month. Residential customers will pay 21 halalas/kWh for monthly consumption of up to 6,000kWh, up from 18 halalas. For consumption above 6,000kWh, the rate will rise from 30 to 33 halalas/kWh, a 10% increase.

The industrial tariff will increase by 15%, from 20 to 23 halalas/kWh. Commercial customers, private healthcare facilities and private educational facilities will pay 25 halalas/kWh, up from 22 halalas, for consumption up to 6,000kWh a month, and 35 halalas/kWh above that level, up from 32 halalas.

Tariffs for charities and government customers will also increase. In addition to consumption-based charges, customers will pay a fixed monthly fee based on the capacity of their electricity meter. This replaces the previous separate charge for meter reading, maintenance and billing, with VAT applied to the revised tariffs.

Electricity investment

The new tariffs coincide with changes to water consumption tariffs announced by the National Water Company, also effective from 1 January 2027.

King Salman Bin Abdulaziz Al-Saud directed support measures following a proposal presented by Crown Prince and Prime Minister Mohammed Bin Salman Bin Abdulaziz Al-Saud.

This includes raising the minimum wage required for Saudi nationals to count as full employees towards private sector localisation quotas under the Nitaqat programme.

The tariff changes come as Saudi Arabia plans substantial investment in its electricity infrastructure. In September 2025, Saudi Energy announced plans to invest SR220bn ($58.7bn) in power infrastructure projects between 2025 and 2030.

A June 2025 report by Fitch Ratings forecast negative free cash flow of about SR16bn a year over the period and rising leverage, reflecting the financial demands of the programme.

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Mark Dowdall
Dubai Municipality confirms AED3bn Tasreef drainage awards
26 October 2026

Dubai Municipality has confirmed it has awarded four contracts worth AED3bn ($817m) to expand the emirate’s stormwater drainage network by about 100 square kilometres under phase three of the Tasreef programme.

The projects will cover Jumeirah, Umm Suqeim, Al-Quoz, Al-Barsha, Al-Wasl and Al-Marmoom. The works include constructing and extending main stormwater drainage lines with diameters of up to three metres.

The four packages are part of Dubai’s AED30bn Tasreef programme, which aims to increase the emirate’s stormwater drainage capacity by 700% and reduce costs associated with pumping stations, network operations and maintenance by 20%.

The contracts have been awarded to China State Construction Engineering Corporation (CSCEC) and three local firms: Arifco Group, Nael Construction & Contracting (NCC) and Detech Contracting. Dubai Municipality did not state which projects the awards relate to.

According to sources, the contract awards include packages TF-15-C1, TF-15-C2 and TF-13-C1.

The first package, TF-15-C1, involves the construction of 21 kilometres of main and secondary drainage lines along Al-Wasl Road and in surrounding areas. It will cover Za’abeel 2, Al-Wasl, Jumeirah 1 and 2, Al-Bada’a, Al-Satwa and Dubai World Trade Centre. The estimated $100m contract was awarded to Detech in July, as exclusively reported by MEED.

The second package, TF-15-C2, covers the corridor between Sheikh Zayed Road and Al-Khail Road. It includes about 14km of main drainage lines serving Al-Quoz Industrial Areas 1, 3 and 4, and Al-Barsha 1. In July, MEED reported that CSCEC had won the engineering, procurement and construction contract for this project.

The third package, TF-13-C1, covers Al-Marmoom, where 23km of drainage infrastructure will be developed. According to a source, Arifco has been awarded this contract.

The final package covers Jumeirah and Umm Suqeim, where about 42km of main drainage lines will serve Umm Suqeim 1, 2 and 3; Umm Al-Sheif; Jumeirah 3; Al-Safa 1 and 2; and Al-Manara.

In May, MEED reported that NCC had been awarded a contract to build a sewage and stormwater drainage system, DS-204. However, it is unconfirmed whether this relates to the same project.

Earlier, in February, the municipality confirmed it had awarded contracts for five new projects under phase two of the programme to expand and strengthen Dubai’s stormwater drainage network.

These included two contracts awarded to Detech and one to CSCEC for stormwater drainage infrastructure. In addition, two consultancy contracts were awarded for the study and design of drainage systems in selected areas across the emirate.

Cumulatively valued at AED2.5bn, the new projects will serve 30 vital areas, spanning approximately 430 million square metres and supporting an estimated population of three million residents by 2040.

Previously, in April 2025, an earlier package of awards was announced under phase one of the Tasreef programme. The overall masterplan aims to expand Dubai’s rainwater drainage capacity by 700% by 2033.

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Mark Dowdall
Nakheel awards $259m Dubai Islands buildings contract
26 October 2026

Dubai-based master developer Nakheel, part of Dubai Holding Real Estate, has awarded local firm Parkway International Contracting a construction contract valued at about AED950m ($259m) for phases two and four of Bay Grove Residences on Dubai Islands.

The package covers 617 residential units across eight buildings, ranging from one to four bedrooms, together with basement structures, infrastructure and community amenities including swimming pools, sports courts and fitness centres.

Phase two comprises 360 homes across four buildings, with main construction scheduled for completion in late 2028.

Phase four includes 257 homes across four buildings, with completion targeted for the second quarter of 2029.

The award follows an earlier contract valued at about AED800m ($218m) awarded to local contractor Metac General Contracting Company for phases one and three, covering 537 homes across seven buildings.

Together, the two contracts total more than AED1.75bn ($476m) and account for all 1,154 planned homes across the 15 buildings of Bay Grove Residences.

Project activity on Dubai Islands has gathered pace in recent months. Earlier this month, Nakheel awarded local firm Mar Marine & Building Contracting a contract for marine and coastal works on Island B. The scope includes constructing breakwaters, removing existing rock revetments and creating a new 320-metre beach near the Bay Villas development, as well as remedial and refurbishment works along approximately 3 kilometres of the island’s western shoreline.

In August 2025, Nakheel awarded Fibrex Contracting a AED2.6bn ($708m) construction contract for the Bay Villas residential project. That followed a AED527m ($143m) contract awarded to Al-Nasr Contracting Company in April 2026 for primary infrastructure and utilities on Island B.

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Yasir Iqbal
Morocco plans second high-speed rail phase to Agadir
26 October 2026

Morocco has outlined a second rail investment cycle for 2030-35, which includes beginning construction of a high-speed rail extension from Marrakech to Agadir and connecting Essaouira to the national rail network.

The pipeline forms part of the government’s 2026-31 programme, presented to parliament last week.

The Marrakech-Agadir link is estimated to cost close to MD55bn ($5.5bn) and will cover a 240-kilometre (km) route through the High Atlas Mountains via Chichaoua. Civil engineering structures, including tunnels and viaducts, are expected to account for nearly 70% of the alignment.

In September, the government issued a decree declaring the Marrakech-Agadir and Chichaoua-Essaouira rail corridors to be of public utility, paving the way for land acquisition and expropriation procedures.

Under the long-term masterplan Plan Rail Maroc 2040, Essaouira is expected to connect to the network via a separate line branching off at Chichaoua, designed for operating speeds of up to 200km an hour. The mainline to Agadir is designed for speeds of up to 320km/h.

The 2030-35 cycle also includes rehabilitating the Casablanca-Khouribga-Oued Zem line; constructing a new line between Oued Zem and Beni Mellal via Bejaad, with a branch to Fquih Ben Salah; doubling and upgrading the 140km Benguerir-Safi line; expanding capacity on the Fez-Oujda corridor; and building new-generation passenger stations.

The plans follow Morocco’s ongoing MD134bn ($13.4bn) 2024-30 rail investment programme, which focuses on completing the Kenitra-Marrakech high-speed line ahead of the 2030 Fifa World Cup.

The programme also includes developing regional express network services across five regions, electrifying the Fez-Oujda line and completing a freight rail link to the Nador West Med port.

Work on the Kenitra-Marrakech line had reached about 30% by May 2026, with commercial services targeted to begin in September 2029.

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Yasir Iqbal

Riyadh tenders King Salman Stadium works

26 October 2026

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Saudi Arabia’s Sports Ministry has tendered a contract covering early works at King Salman International Stadium in Riyadh.

The scope includes enabling works, site preparation and initial construction activities.

The tender was issued on 11 October, with a submission deadline of 19 November.

The stadium will cover about 660,000 square metres (sq m) and seat 92,000. Facilities will include a 150-seat royal suite, 120 hospitality suites, 300 VIP seats and 2,200 dignitary seats.

The wider development will include sports facilities covering more than 360,000 sq m, including two training fields and fan zones; a closed sports hall; an Olympic-sized swimming pool; an athletics track; and outdoor courts for volleyball, basketball and padel.

The stadium is set to host the final of the 2034 Fifa World Cup and will serve as the Saudi national football team’s main base.

US-based architectural firm Populous is the lead architect for the stadium.

Construction of the stadium is expected to be completed by 2029.

The stadium will be located next to King Abdulaziz Park.

Firms submitted prequalification statements for the main design-and-build contract in February.

Saudi stadium plans

In August 2024, MEED reported that Saudi Arabia planned to build 11 new stadiums and refurbish four facilities for the 2034 Fifa World Cup.

Eight stadiums will be located in Riyadh, four in Jeddah and one each in Al-Khobar, Abha and Neom.

A further 10 cities will host training bases: Al-Baha, Jazan, Taif, Medina, Alula, Umluj, Tabuk, Hail, Al-Ahsa and Buraidah.

There are expected to be 134 training sites in the kingdom, including 61 existing facilities and 73 new venues.

Saudi Arabia was officially selected to host the 2034 Fifa World Cup during an online convention of Fifa member associations at the Fifa Congress on 11 December 2024.

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