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Heady times for biggest construction markets

22 December 2023

 

It was a whirlwind couple of months at the end of 2023 with major global announcements that will positively impact the region’s largest construction market for years to come.

On 31 October, Saudi Arabia was effectively confirmed as the 2034 Fifa World Cup host after the only other potential bidder for the tournament withdrew from the race. 

Then, on 28 November, Saudi Arabia was selected as the host country for the World Expo 2030 after securing 72 per cent of the votes cast by Bureau International des Expositions member states. 

Recent experience from elsewhere in the GCC has shown that hosting these events comes with a plethora of construction projects.

Qatar invested billions of dollars in infrastructure ahead of the Fifa World Cup 2022; similarly, Dubai spent heavily on infrastructure for Expo 2020.

Crucially, these events, global pandemics withstanding, are immovable deadlines that must be met, which means construction projects have to be delivered on time. 

Significant undertakings

While the investment required for the 2034 World Cup remains to be determined, the Saudi bid must include a minimum of 14 all-seater stadiums, of which at least four should be existing structures. The capacity needed is at least 80,000 seats for the opening and final matches, and at least 60,000 seats for the semi-finals. For all other matches, a minimum of 40,000 seats are necessary. 

Meanwhile, the Royal Commission for Riyadh City, which led the Expo 2030 bid, has said the Expo site masterplan, which is located north of Riyadh close to King Khalid International airport, will cost $7.8bn to develop. 

While both programmes of work are significant undertakings, they are not expected to be as transformative for the Saudi economy as they were for Qatar and Dubai, which were both smaller and dwindling construction markets when they secured the rights to host their events. 

The same cannot be said for Saudi Arabia, where the construction market is already overheated as construction activity ramps up on a series of self-styled gigaprojects, including Neom, Diriyah Gate and Qiddiya, that aim to transform the economy as part of Vision 2030. 

In a report on the Saudi economy released on 2 November, London-based Capital Economics said: “We don’t expect this to be the fillip to the Saudi economy as it was for Qatar, which hosted the World Cup in 2022.

“First, Saudi Arabia already has much of the infrastructure in place, including stadiums, meaning there is unlikely to be a World Cup-related construction boom like Qatar saw.

“Second, even with 104 games scheduled compared to 64 in Qatar, tournament-related tourism spending we estimate could be equal to just 2 per cent of non-hydrocarbon GDP (compared to 6 per cent in Qatar).”

Capital Economics made similar comments on the impact of the 2030 Expo.

In a report issued on 30 November, it said: “[While] hosting the event may support the kingdom’s longer-term goals of boosting tourism, it is highly unlikely that the Expo itself will provide a boost to the economy of the same magnitude as it did in Dubai.

“The Saudi economy is 10 times larger than that of Dubai, so even a similar sized nominal impact will be a much smaller boost as a share of GDP.”

In terms of construction and transport awards, 2023 has been the best year in recent times and could potentially be the best year on record.

By 1 December, there had been $36.3bn of construction and transport awards in Saudi Arabia, which already exceeds the 2022 total of $35.7bn. The record was achieved in 2013 when there were $41.7bn of contract awards, with a significant portion coming from the $23bn of contracts signed that year for the six lines of the Riyadh metro system.

UAE in 2023

It was also a good 2023 for the UAE, which recorded its best contract awards total in over a decade. There were $34.3bn of contract awards by 1 December 2023, higher than the 2014 high of $34.1bn, but still significantly short of 2008, when there were $40.2bn of construction and transport contract awards.

The UAE’s strongly performing property market has driven the country’s construction sector.

Next year, spending on projects by the government and its related entities will play a larger role as tendering starts for projects such as the $4.9bn extension to Dubai Metro’s Blue Line.

Runners up

For the other four GCC markets, the performance in 2023 and outlook for 2024 is more subdued. The hope is that as activity continues in the region’s two largest markets, the others will follow with ambitious projects. There are tentative signs that this is starting to happen as major projects restart or move into tendering. 

The region’s other major construction market is Egypt. This year, its performance has stuttered as the total value of contract awards fell to $9.1bn from $29bn. As the economy continues to struggle with ongoing currency issues, the outlook for 2024 is subdued.

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Colin Foreman

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    Saudi Arabia's Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company and the National Centre for Privatisation & PPP, have received interest from over 145 local and international companies for a contract to develop the Qiddiya high-speed rail project in Riyadh.

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    The Aramco Stadium in Khobar is moving forward at an impressive pace as the fast-track project races towards completion in 2026.

    The 47,000-seat stadium will be the new home for the Aramco-owned Al-Qadsiah Club and a key venue for the 2027 AFC Asian Cup and the 2034 Fifa World Cup. 

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    “We completed the design within six months,” said Mohammed Subhi, the Aramco Stadium’s project manager.


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    An early engagement approach with the main contractor – a joint venture of Besix and Al-Bawani – was instrumental in maintaining momentum. This partnership began early in 2024, allowing for collaborative input on critical construction elements. 

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    Engineering challenges

    The stadium’s architectural design, inspired by the natural whirlpools of the Gulf and featuring interwoven transparent sails, presents significant engineering challenges, particularly in the structural steel and façade work. For spectator comfort, the stadium is equipped with full cooling systems and designed to the highest international standards.

    Logistics management is another crucial facet of the project, which is located in central Khobar. With thousands of workers on site, the movement of materials is tightly controlled to minimise community disruption. 

    “We control how many trucks can enter the site and at what time. For example, we cannot cast concrete during the day. It has to be after 6pm, up until the early morning,” said Subhi.

    A key priority on site is health and safety, an area where the organisation’s legacy from its oil and gas operations is clearly visible. Subhi explains that the principle of health and safety is part of the company’s DNA and is embodied in the deployment of advanced technology and rigorous standards, which have collectively resulted in over 10 million safe working hours to date.

    The project employs a sophisticated Smart Safety Command Centre (SCC), which utilises artificial intelligence-based monitoring and 24/7 surveillance. One key feature of the centre is the crane collision prevention system – a key technological advancement in heavy machinery coordination and a first for the region. 

    “We have tower cranes and crawler cranes talking to each other. The anti-collision system means cranes talk to each other without human interference, and they automatically shut down when they are too close to each other,” said Subhi.


    A key technological advancement is the crane collision prevention system, which means the cranes talk to each other and shut down if they become too close

    In addition to ground operations, the project is leveraging aerial technology to mitigate risk in high-altitude work.

    “We have used drones for the inspection of the cranes and inspection of the steel structure itself to minimise the risk of working at height,” said Subhi.


    Drones have been adopted on-site to mitigate the risk of working at height

    Worker welfare

    The project’s commitment extends beyond mere regulatory compliance to comprehensive worker welfare, establishing a high standard for construction sites in the region. 

    With current staffing reaching approximately 11,000 direct and indirect workers, welfare provisions are a core priority, linking directly back to Aramco’s corporate standards.

    In a region where extreme heat is a constant challenge, the project has implemented advanced heat stress management protocols. This includes the installation of heat sensors with alarm systems, mandatory work stoppage during peak heat hours and regular briefings on heat exhaustion symptoms. Fully air-conditioned rest areas are provided for breaks and meals.

    Aramco is also committed to developing national talent. A significant proportion of the staff are young, and about 20% of the team are women.

    The relationship with the joint-venture contractor is defined by collaboration rather than traditional client-contractor hierarchy. “We are one team, working together,” said Subhi. This approach has fostered a cooperative environment that is accelerating the on-site progress towards the 2026 completion goal. 

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    Colin Foreman