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Remaking construction in Saudi Arabia

27 March 2026

 

As the Public Investment Fund (PIF) took a leading role in developing projects following the launch of Vision 2030, it quickly realised that Saudi Arabia’s construction sector needed support if the kingdom was to achieve its broader economic ambitions.

The PIF’s National Development Division (NDD) is the entity tasked with building capacity and capability in the construction sector to support PIF projects and other strategically important schemes in the kingdom. 

“Our job is to facilitate the development of the local value chains, which are essential to support the development and operations of PIF portfolio companies,” says Leyla Abdimomunova, head of real estate and construction, National Development Division, PIF.

The scale of this undertaking requires a multi-front strategy, targeting everything from consultancy services and contracting capacity to raw materials and advanced technologies. 

“The focus is on design and construction services, building materials, construction equipment and the value chain for all things in construction technology. This work requires engagements with stakeholders within the PIF portfolio: development and contracting companies where PIF has a share,” says Abdimomunova. “We also work closely with governmental stakeholders – including the Ministry of Municipalities & Housing, the Ministry of Investment and the Ministry of Industry & Mineral Resources – alongside our private sector partners, to ensure alignment across the ecosystem. 

“This collaboration approach is essential to addressing market challenges holistically and creating an environment where businesses can invest, grow and participate more effectively in Saudi Arabia’s development,” she notes.

Unified strategy 

The integrated approach was born out of necessity. 

“When we started this work five years ago, the initial challenge we dealt with was the shortage of the local supply of construction services and materials,” says Abdimomunova.

To bridge the gap, the NDD looked to both support local players and attract international firms. 

“The focus was on the localisation of the supply chain, bringing the manufacturing capacity into the kingdom by either expanding the existing capacities of local players or installing new capacity together with local players, but also bringing foreign investments into the country to set up factories,” she says.

On the services side, the challenge was reputational. Riyadh had to convince the world’s best builders that the Saudi market had fundamentally changed. While courting global giants, the NDD also had to address the fragmentation of the domestic market. 

“We found that there were two primary obstacles in our portfolio: a high concentration of contractors on one hand, and underutilised capabilities of the local contractors on the other hand.”

The challenge was moving the large number of small and medium-sized enterprises (SMEs) from the periphery to the core of the PIF’s portfolio of projects. 

“In order to overcome these obstacles, a lot of focus was on attracting international contractors – those that were not working in the kingdom at the time – in order to expand and diversify the pool of contractors, while also putting a lot of effort into building up the capabilities within the local market,” Abdimomunova notes. 

“The local contracting market is very fragmented. A large proportion of contractors are SMEs, and only the large Saudi contractors are predominantly known inside the kingdom. 

“We put in place programmes to support the development of the medium-sized contractors and increase their visibility to our development companies,” she says.

A lot of effort went into making sure contractors have access to financing
Leyla Abdimomunova, National Development Division, PIF

The NDD has also introduced practical upskilling and financial tools. “We put in place a few tools, working together with ecosystem partners. For example, the Prequalification Platform, which was launched and is being operated with the Saudi Contractors Authority, [and] contractor upskilling bootcamps that have been delivered by our development companies to provide contractors with the basic understanding needed to be able to bid for projects.

“A lot of effort went into making sure contractors have access to financing,” Abdimomunova adds.

Indeed, addressing the finances of the construction sector was another critical area for the NDD. 

By moving beyond traditional methods and practices, it has introduced more flexible liquidity options for the industry. 

“We launched the Contractor Financing Programme to expand access to financing and strengthen liquidity for contactors supporting Saudi Arabia’s development pipeline. 

“In partnership with the National Infrastructure Fund, we introduced guarantee mechanisms to unlock additional bank lending capacity, alongside a new product for the region: surety bonds – as an insurance alternative to traditional bank guarantees,” says Abdimomunova. 

“Since receiving regulatory approval last year, 34 surety bonds have already been issued, helping contractors participate more effectively in large-scale projects.”

Adjusting priorities

With the foundational work established, the NDD is now shifting its focus towards streamlining the experience for international companies and tackling the sector’s long-standing structural hurdles. 

Looking ahead, the NDD intends to tackle the perennial problems of the industry – payment delays and productivity – to ensure that the transformation of the sector is permanent.

“Going forwards, our work will go one level deeper, focusing on resolving structural challenges and strengthening the underlying enablers that support private sector participation. 

“We are working closely with our partners across Saudi Arabia to ensure these improvements are sustainable, scalable and embedded not only within the PIF’s ecosystem, but across the broader national economy,” Abdimomunova concludes. 

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Colin Foreman

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