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Riyadh steps up the Vision 2030 tempo

22 March 2023

 

Riyadh has begun pushing ahead with many of its Vision 2030 initiatives at a faster pace and in a much more tangible manner in the past six months, with the go-ahead given for several infrastructure packages on the kingdom’s flagship Neom project.

More than $13bn-worth of work has been awarded on Neom-linked projects since the start of 2022, including initial piling and tunnel blasting and drilling work for the Line development. More than $7bn has also been awarded in just the past five months, including $4.5bn across community housing schemes.

There has been equally robust activity on the other four official Public Investment Fund (PIF) gigaprojects. Projects worth another $1.8bn have been awarded since 2021 on the Diriyah Gate project, alongside $1.5bn-worth on the Roshn housing programme and $1.1bn each on the Red Sea Project and Qiddiya entertainment city.

Investment uptick

The shift in project tempo has also been matched by a step-up in other Vision 2030 initiatives, including the Shareek investment programme, which is aimed at supporting large Saudi companies in boosting the economic contribution of the kingdom’s private sector.

On 1 March, Saudi Arabia announced $51bn-worth of investments across eight Saudi companies as part of the programme. By 2030, Riyadh wants to increase the private sector GDP contribution to 65 per cent, while increasing the country’s non-oil exports from 16 to 50 per cent.

For external investors too, Saudi Arabia’s Vision 2030 plans are the top opportunity in the region, according to a recent poll by Egyptian financial services firm EFG Hermes. The survey showed that 34 per cent of respondents viewed Vision 2030 as the most important source of current investment opportunities.

There are meanwhile 23 companies waiting to list on the Saudi stock exchange. Those companies “are essentially on the runway waiting for the appropriate time, and obviously market conditions”, according to Mohammed ElKuwaiz, the chairman of the Capital Market Authority.

Last year was a record-breaking year for Saudi Arabia’s capital markets, with companies raising about $10.7bn (SR40bn) from initial public offerings (IPOs). The country also led regional IPO activity, with 34 out of the 48 GCC IPOs debuting on either the Tadawul or the Nomu.

Looking ahead, the Saudi market regulator is reviewing a further 77 IPO applications. It is also formulating a framework for dual listings, following the example of Americana, the first company to be dually listed in the kingdom and the UAE.

More broadly, the business confidence in the non-oil private sector continues to swell. In February, Saudi Arabia’s non-oil business activity reached its highest level in eight years due to a surge in demand, according to the Riyad Bank–S&P Saudi Arabia Purchasing Managers’ Index.

The index – in which a figure above 50 indicates expansion – increased from 58.2 to 59.8 in the fastest rate of increase since March 2015. The new orders component of the index rose to a record high of 68.7, with over 42 per cent of surveyed companies reporting a rise in new orders. The overall higher output also saw further employment and purchasing expansion.

Despite tighter monetary conditions, Naif al-Ghaith, Riyad Bank’s chief economist, noted the robust demand and supply balance spurred by the ongoing projects in the kingdom, which has caused “sharper uplifts in output and new orders for firms, as well as rising demand for labour”.

He added that while “prices have responded to the surge in demand, with the increase in input costs evident especially in the services and construction sectors”, business confidence remains high amid expectations for strong ongoing activity over the next 12 months.

Growth forecast

Despite the positive economic signs, the IMF reduced its 2023 GDP projection for Saudi Arabia to 2.6 per cent in January. This is in response to Opec+ agreements to restrict oil production 1.3 percentage points below the projection of 3.9 per cent growth in its October outlook.

Though non-oil growth remains strong, the reduction in oil output will unavoidably impact Saudi Arabia’s topline GDP. At the same time, the toll on oil revenue should be relatively contained and not unduly affect the kingdom’s capital spending, which is at this point being backed by a diverse pool of both sovereign and private assets.

According to a late February forecast by Riyad Capital, Saudi Arabia’s economy could grow by 3 per cent in 2023, driven principally by a pick-up in the non-oil sector, which it predicts will see a growth rate of 5 per cent this year.

In 2022, Saudi Arabia witnessed its strongest growth in the third quarter, when the GDP rate hit 8.8 per cent, according to the IMF, boosted by a 6.2 per cent growth rate for non-oil activity.

Riyad Capital also expects the weaker oil prices during the first half of 2023 to recover in the second half of the year, with Brent crude expected to end 2023 at a level above $100 a barrel.

MEED's April 2023 special report on Saudi Arabia includes:

> CONSTRUCTION: Saudi construction project ramp-up accelerates

> UPSTREAM: Aramco slated to escalate upstream spending

> DOWNSTREAM: Petchems ambitions define Saudi downstream

> POWER: Saudi Arabia reinvigorates power sector

> WATER: Saudi water begins next growth phase

> BANKING: Saudi banks bid to keep ahead of the pack

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John Bambridge

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    After initial concerns that the market would experience a sharp downturn and project cancellations following the onset of conflict in the region, regional president McGrail says WSP has yet to see a single major contract cancelled across its regional portfolio.

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    Under the surface

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    “None of the projects we are currently involved in have been put on hold or suspended,” he says. “It is more re-evaluation. Some of that is investor sentiment, but some of it is materials and logistics as well, which people do not necessarily consider.”

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    “Requests for proposals have not slowed down across any of our disciplines or business units,” he says. “We are definitely seeing an uptick in infrastructure.”

    Infrastructure pivot

    That focus points to where McGrail expects the next few years of growth to come from. Rail sits at the centre of the UAE story, alongside road upgrades and other major developments in Abu Dhabi. In Dubai, the clearest signal of intent is the expansion of Al-Maktoum International airport.

    “Al-Maktoum is a really good indicator of the future direction of travel,” he says. “That is not a project that is slowing down. There has been a commitment to Emirates that it will move there, and it is still progressing.”

    The scale of the airport – and the challenge of relocating an airline the size of Emirates in one move – raises the question of how it will be funded. Here, McGrail returns to the theme of stability and to the mechanism that underpins it.

    “One of the beauties of this region is the ability of government to step in,” he says. “They can fund it. If the private sector does start to suffer, that is the backstop. They push money into infrastructure – roads, rail, airports – which keeps our industry moving.”

    Saudi reset

    In Saudi Arabia, the recalibration story predates the conflict, and McGrail says the change should be read as a strength rather than a retreat.

    “I am positive,” he says. “When the reprioritisation started at the beginning of 2025, having lived through the global financial crisis here, I saw the decision to stop, re-evaluate and reprioritise expenditure as a positive. When Vision 2030 was set, Saudi Arabia had not won Expo or the World Cup, so the reprioritisation was the right thing to do. Saudi Arabia will come out of it stronger. Short-term pain, long-term gain.”

    The nature of the work is shifting with the budget. McGrail sees the kingdom moving towards a model long familiar in the UAE, in which core infrastructure and a handful of landmark buildings are delivered first, before surrounding plots are carved up and sold on.

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    The $3bn Taweelah C combined-cycle gas turbine (CCGT) project has been the UAE power sector’s standout contract award this year, accounting for the majority of the $4.17bn in awards as of early September.

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    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Royal Commission for Riyadh City (RCRC) has signed contracts worth about SR5.5bn ($1.5bn) to procure 94 additional trains for the Riyadh Metro network.

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    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
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    Register for MEED’s 14-day trial access 

    The US Department of State has initiated market research to procure a design-and-build contract for the US Pavilion at Expo 2030 Riyadh.

    According to procurement documents released through the US federal contracting portal, the project covers the full design, construction, exhibition fit-out, maintenance, and eventual decommissioning and removal of the national pavilion.

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    The masterplan covers 6 square kilometres, making it one of the largest sites ever designated for a World Expo event.

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

    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20580855/main.jpeg
    Yasir Iqbal