meed-logo

line1 line2 line3
SIGN IN / REGISTER

Riyadh reins in spending

24 May 2024

 

Register for MEED's guest programme 

On the surface, it feels like business as usual in Saudi Arabia as new projects continue to be launched.

On 8 May, designs for another futuristic project at Neom’s Gulf of Aqaba were released with slick computer-generated imagery. Known as Jaumur (pictured), it includes the development of a mixed-use community featuring 1,200 residential units and two hotels offering 350 rooms. The most eye-catching part of the project is at the marina, which will have a 1.5-kilometre aerofoil that will rise above the yacht berths.

Beneath the surface, a consensus is emerging that the kingdom’s projects market is in the midst of a recalibration as spending is reined in.

The challenge for Riyadh over the next few years will be balancing the delivery of its ambitions with the reality of its financial capabilities.

The first public sign that things were changing came in December 2023, when Finance Minister Mohammed Al Jadaan told reporters at the launch of the 2024 budget that the delivery of some of the projects included in the Saudi Vision 2030 plan may be delayed to avoid pressure on the economy.

Tightening the purse strings

The ministry-level decision is trickling down as individual development companies are not getting their full budgets approved. “Our firm is working on almost all of the major projects in Saudi Arabia in some capacity,” says an international consultant. “The feedback we are getting is that budget spending for 2024 has been reduced by about 30% on average.”

Many of these delivery companies are subsidiaries of sovereign wealth vehicle the Public Investment Fund (PIF), which has taken a leading role in transforming the kingdom’s economy over the past eight years with development schemes including its five official gigaprojects, Neom, Roshn, Red Sea Global (RSG), Qiddiya and Diriyah.

The reports of budget cuts have coincided with a drop in contract awards. According to MEED’s Gigaprojects Tracker, there has been a sharp decline in the value of contracts awarded by the five official gigaprojects this year. 

In April, they awarded $166m of work, down from $271m in March and $509m in February. The total in January was $5.56bn, largely due to the $4.7bn contract awarded to the local Webuild for the construction of dams at the Trojena mountain resort in Neom.

The reports of budget cuts have coincided with a drop in contract awards

Funding options

The budget cuts are just part of the message, says the consultant. The delivery companies are being told to find external investment to deliver their projects, and there are already signs of this happening. The clearest came in late April, when Neom announced a $2.7bn revolving credit facility from nine local banks to cater to the project’s short-term financing requirements.

In a statement, Neom CEO Nadhmi Nasser highlighted the project’s drive to find new sources of funding. “As Neom continues to gather pace, this new credit facility, backed by Saudi Arabia’s leading financial institutions, is a natural fit within our wider strategy for funding. We continue to explore a variety of funding sources as we deliver transformational infrastructure assets while supporting the wider Vision 2030 programme,” he said. 

In a research note following the deal, London-based Capital Economics said: “While this does take some of the onus away from the government and Public Investment Fund, it is increasingly using resources that could be used more productively in the private non-oil sector.”

Capital Economics also noted that the facility adds to the growing share of commercial banks’ lending to the public sector. Since 2015, this share has increased from 7% to 22% in March 2024.

Another solution for development companies is deploying public-private partnerships (PPPs) to deliver infrastructure and utilities. This is attractive because PPPs reduce the initial capital expenditure required for a project. 

RSG has already pursued this route for The Red Sea Project and Amaala; other development companies are exploring the PPP avenue for their projects.

Real estate investment is another option. There is an expectation that Riyadh will introduce a foreign ownership law that could turbocharge the market as a similar law did for Dubai in the early 2000s. 

There are already examples of real estate investment deals being done, including the National Housing Company with Spain’s Urbas Group for housing in Riyadh, RSG with Kingdom Holding Company for hotels, and King Salman with a real estate development fund.

PPP offers budget and efficiency routes

Prioritising projects

As projects in the kingdom are developed differently, the challenge for the construction industry will be identifying which of the many schemes that aim to transform the Saudi economy are a top priority.

Much will depend on the success of the investment drive. The most likely projects to go ahead are those linked to global events with immovable deadlines. Experience across the region over the past decade has shown that even if construction elsewhere slowed down, construction for Expo 2020 in Dubai and the 2022 Fifa World Cup in Qatar continued regardless. 

“For Saudi Arabia, there are three major events: the Asian Winter Games in 2029, Expo 2030 and World Cup 2034. They will be the obvious priorities,” says the international consultant.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11816519/main.gif
Colin Foreman

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

Click here to register
Exclusive from Meed
Related Articles
  • Consultants submit bids for Saudi Arabia’s GCC rail link

    20 July 2026

     

    Consultants submitted proposals on 14 July for a contract to provide design consultancy services for the Saudi Arabian section of the GCC railway network, which is intended to link all six member states.

    Saudi Arabia Railways (SAR) issued the tender on 7 May, MEED previously reported.

    The tender covers the concept, preliminary and issued for construction design stages. SAR requires the selected consultant to review, update and complete the existing preliminary design.

    The consultants who submitted bids include: 

    • Atkins with Khatib & Alami
    • DeutscheBahn with ARX
    • Egis with Sener
    • Idom with Dal al-Handasah
    • Systra

    Saudi Arabia’s section of the railway will start at Al-Khafji in the Eastern Province, near the border with Kuwait, and end at Al-Batha, on Saudi Arabia’s border with the UAE. The route length in Saudi Arabia will be about 672 kilometres (km).

    The railway will interface with the Kuwait National Rail Road (KNRR) project on the Kuwaiti side. Last year, MEED exclusively reported that the KNRR design contract was awarded to Turkiye’s Proyapi Muhendislik ve Musavirlik Anonim Sirketi.

    The KNRR forms part of the wider GCC rail network. GCC railway projects have gained renewed momentum since the six member states signed the Al-Ula Declaration in January 2021.

    In October last year, Qatar’s cabinet approved a draft agreement paving the way for a railway link between Qatar and Saudi Arabia as part of the GCC railway network.

    GCC railway line

    Under the overall plan, the railway will run from Kuwait, pass through Dammam in Saudi Arabia, reach Bahrain via a planned causeway, and continue from Dammam to Qatar, the UAE and, ultimately, Muscat via Sohar in Oman. The railway is reported to span about 2,186km in total.

    The route length within each member state is as follows: 684km in the UAE, 672km in Saudi Arabia, 306km in Oman, 283km in Qatar, 145km in Kuwait and 36km in Bahrain.

    The railway is designed for passenger trains travelling at 220km/h and freight trains operating at 80-120km/h.

    With high levels of project activity, governments in spending mode and renewed cooperation under the Al-Ula Declaration, the latest efforts to restart the GCC railway project may make more progress than previous attempts. If completed, the railway could prove transformational for a region that is globally connected but still divided by national borders.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17705320/main.gif
    Yasir Iqbal
  • Chinese firm wins Dubai drainage contract

    20 July 2026

    China State Construction Engineering Corporation (CSCEC) has announced it has won a contract to deliver a stormwater drainage pipeline package under Dubai Municipality’s Tasreef programme.

    The contract is for the TF-15-C2 stormwater drainage network project located along Umm Suqeim Road in the Al-Barsha and Al-Quoz areas of Dubai. 

    MEED exclusively revealed in May that the contractor had been selected for the engineering, procurement and construction (EPC) contract. The project is estimated to cost $162m.

    The scope of work includes the construction of about 20 kilometres of new stormwater pipelines, together with associated inspection and intake manholes. The project is located west of the Dubai Canal and will connect the Al-Quoz 3 and Al-Quoz 4 industrial areas with Al-Quoz 1.

    It is being delivered as part of Dubai’s Tasreef strategic plan, which supports the Dubai 2040 Urban Master Plan. Once completed, the new drainage infrastructure is expected to improve the emirate’s stormwater network, increase flood protection and enhance the resilience of Dubai’s infrastructure.

    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 include a separate contract awarded to CSCEC for the TF-11-C1 stormwater drainage project in the Dubailand area.

    Also in February, Dubai Municipality invited consultants to qualify for a contract to supervise construction on the TF-15-C2 stormwater drainage projects along with two other projects (TF-13-C1 and TF-16-C1) under the Tasreef programme.

    According to a source, a consultant has yet to be appointed.

    TF-16-C1 involves upgrading and rehabilitating the stormwater system east of the Dubai Canal, while TF-13-C1 involves building a water pipeline stormwater drainage system at Al-Marmoum, Al-Qudra and Al-Yalayis 2 & 3.

    Bids are currently under evaluation for the EPC contracts for both projects.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17705058/main.jpg
    Mark Dowdall
  • Dubai receives eight bids for Hassyan SWRO pipeline contract

    20 July 2026

    Register for MEED’s 14-day trial access 

    Eight contractors have made offers for a contract to supply, install, test and commission glass-reinforced epoxy (GRE) water transmission pipelines and associated works for the Hassyan seawater reverse osmosis (SWRO) phase two network in Dubai.

    The contract relates to project one of the Hassyan pipeline network expansion being undertaken by state utility Dubai Electricity & Water Authority (Dewa).

    Local firm Binladin Contracting Group submitted the lowest offer of AED335.92m ($91.5m), according to results published by the utility.

    The other bids were:

    • Green Oasis General Contracting (UAE) – AED345.00m ($93.9m)
    • Al-Nasr Contracting (UAE) – AED391.54m ($106.6m)
    • Wade Adams Contracting (UAE) – AED393.80m ($107.2m)
    • RMB Contracting (UAE) – AED437.96m ($119.3m) 
    • Tristar Engineering & Construction (UAE) – AED441.55m ($120.2m)
    • Shapoorji Pallonji Mideast (UAE/India) – AED451.47m ($122.9m)
    • Gulf Petrochemical Services Trading (UAE) – AED495.20m ($134.8m)

    RMB also submitted a conditional discounted offer of AED427.02m ($116.3m). Three companies submitted regret notices, while one offer was rejected after no valid commercial offer was received. 

    In January, Dewa announced that construction of the 180-million-imperial-gallon-a-day phase one of the Hassyan SWRO independent water project was 90% complete.

    Dewa has two other contracts out for tender for GRE water transmission pipeline work related to the Hassyan SWRO phase two network.

    Project two was tendered on 22 January and has a bid submission deadline of 21 July. Project three was tendered on 26 January and has a bid submission deadline of 29 July.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17704940/main.jpg
    Mark Dowdall
  • Abu Dhabi launches E20 highway expansion project

    20 July 2026

    Abu Dhabi’s Department of Municipalities and Transport (DMT) has announced the E20 highway expansion project.

    The scheme covers widening the main carriageway from three to five lanes, constructing more than 10 kilometres (km) of new ramps and loops, and building four bridges.

    Works also include 1.5km of internal roads and the addition of eight signalised junctions across Khalifa City and the Zayed International airport precinct.

    The project includes utility works, comprising 62km of stormwater drainage, 37km of irrigation networks and the installation of 485 streetlights.

    The E20 expansion is one of the major infrastructure schemes being overseen by DMT in Abu Dhabi.

    Separately, DMT is evaluating bids for a design-and-build contract to construct two bridges serving Hudayriyat Island in Abu Dhabi.

    The scope includes a two-lane bridge connecting 32nd Street to Shakhbout Bin Sultan Street, and a single-lane bridge on 8th Street. It also includes upgrades to signalised intersections.

    Shakhbout Bin Sultan Street is a two-way road with three lanes in each direction, providing access to and from Hudayriyat Island.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17704696/main.jpg
    Yasir Iqbal
  • Firms given more time for Mid Island Parkway prequalifications

    20 July 2026

     

    Abu Dhabi’s Modon Infrastructure has extended the deadline to 31 July for firms to submit expressions of interest and prequalification statements for the next phase of Abu Dhabi’s Mid Island Parkway Project (MIPP), which will be developed as a public-private partnership (PPP).

    The previous deadline was 15 July. MEED understands the prequalification notice was issued in June, following Modon Infrastructure’s invitation in May for firms to register their interest.

    Modon Infrastructure will act as the lead developer and will hold a majority equity stake in the project company. It will award contracts for engineering, procurement and construction; operations and maintenance; and project advisory services.

    Phase two of the MIPP involves the construction of about 11 kilometres (km) of highways, comprising a mix of three-, four- and five-lane sections. The highways will connect the Um-Yifeenah, Al-Jubail, Al-Sammaliyyah and Sas Al-Nakhl islands to Khalifa City and the E10 road.

    The scope also includes the construction of three interchanges – E20, E10 and Dumbbell – on Al-Sammaliyyah Island.

    The project includes several major structures, including the E20 interchange, which will feature cast-in-place box-girder and void-slab bridges, and the E10 interchange, which will feature cast-in-place box-girder bridges. It also includes I-girder bridges between Raha Beach West and Sas Al-Nakhl Island, as well as a causeway at Sas Al-Nakhl Island.

    Further elements include a cast-in-place balanced cantilever bridge between Sas Al-Nakhl Island and Al-Sammaliyyah Island; a tunnel between Al-Sammaliyyah Island and Bilrimaid Island; and a cut-and-cover (open) tunnel on Bilrimaid Island. Another tunnel will connect Bilrimaid Island to Um-Yifeenah Island.

    Abu Dhabi awarded three packages for phase one of the MIPP in 2024. The contract for Package 1A was awarded to a joint venture of Turkish contractor Dogus Construction and UAE firm Gulf Contractors. Package 1B was awarded to a joint venture of Yas Projects (Alpha Dhabi Holding) and China Railway International Group. Beijing-headquartered China Harbour Engineering Company and the UAE’s Agility Engineering & Contracting Company won the contract for Package 1C.

    Phase one starts at the existing Saadiyat Interchange, connecting the E12 to the MIPP, and ends at the recently constructed Um-Yifeenah Highway.

    It comprises a dual main road with a total length of 8km, including four traffic lanes in each direction, two interchanges, a tunnel and associated infrastructure works.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17704765/main.jpg
    Yasir Iqbal