meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi demand-supply imbalance needs action

26 January 2024

Some $879bn-worth of giga projects are planned in Saudi Arabia, of which about $50bn has been awarded to date, according to regional projects tracker MEED Projects.

The data shows that 2023 was a record year for projects in Saudi Arabia. 

However, the extensive scope of work associated with these projects has exposed the challenges of scaling up the local construction supply chain fast enough to meet the surge in demand.

With projects launching in quick succession, suppliers, contractors and subcontractors are struggling to keep up with the influx of new work into the market.

Riad Bsaibes, president and CEO of Amana Investments, says this shortage of resources is a critical issue, stating, “There is currently a bottleneck in the entire supply chain, from human capital and materials to subcontractors and general contractors.”

Moreover, the construction sector faces significant execution risks.

While some projects are subject to delays, efforts to accelerate others are exerting pressure on timelines and budgets. 

Highlighting the disparity, Bsaibes notes, “This mismatch is leading to delays as schedules stretch out and costs rise above original tender amounts. This creates risks for contractors if they cannot deliver projects on schedule or within the costs estimated during the tendering process.”

Career investment

The launch of Saudi Arabia's Vision 2030 has spurred an era of growth and investment. The surge in construction projects aligns with the kingdom's goals, positively impacting employment opportunities. 

Yet recruiting top local and expatriate talent across large-scale projects is becoming a challenge in Saudi Arabia, according to Bsaibes.

He acknowledges that attracting and retaining skilled workers is getting more difficult with time, stating: “This is particularly challenging due to the scale of expansion, coupled with the pressure of Saudi Arabia’s nationalisation policies that encourage contractors to recruit qualified Saudi nationals.”

As well as focusing on hiring practices, companies must also commit to nurturing and enhancing skills over time.

Continuous upskilling is crucial in the construction industry, where new technologies, techniques and regulations frequently emerge, requiring employees to adapt and stay relevant.

Bsaibes advocates a strategic approach to talent management that involves upskilling the existing workforce before hiring new talent.

He recommends a hands-on approach to learning and improving skills.

“A core part of skills development at Amana includes on-the-job training for all employees,” he adds.

“Skills development must extend to developing competency in cutting-edge technologies such as building information modelling (BIM), modular construction and other digital tools. This long-term effort should be a key priority for firms.

“Continuous learning and development are very important throughout an employee’s career, starting from their initial entry into the construction workforce.”

Bsaibes further highlights the significance of internships in providing candidates with practical experience before taking on permanent positions. 

This approach aims to facilitate a smoother onboarding process for individuals entering the workforce, ensuring they are well-prepared for new roles.

“Companies should invest in the professional development of their employees,” he says. “This could include training programmes, workshops and educational initiatives aimed at enhancing the skills, knowledge and capabilities of the workforce.”

Credit challenge

Access to credit is another major issue in the construction sector. A strong financial profile enhances borrowing capacity and facilitates the smooth execution of projects by ensuring a steady flow of financial resources.

Addressing credit concerns is, therefore, essential for construction firms. 

Bsaibes recommends adhering to a strategic financial approach, opting to retain significant cash reserves instead of incurring debt.

“This approach not only facilitates self-financing for projects when necessary, but also serves as collateral for the letters of guarantee frequently demanded in construction contracts. 

“Moreover, it provides the company with the flexibility to navigate through any payment delays without succumbing to financial distress.

“Amana has a strong balance sheet and well-established banking relationships,” he adds. “Banks view Amana as low risk due to its solid cash reserves and strong track record of on-time payments across different regions/currencies.”

In contrast, Bsaibes points out that many other contractors struggle due to insufficient cash flow management and weaker balance sheets. 

“Maintaining high cash levels on its balance sheet is a fundamental goal for Amana.”

Strong working capital allows the contractor to be selective in bidding for projects, avoiding low-margin work while still securing sizable contracts.

“Additionally, we have a positive history with lenders, which allows Amana to support its operations and capitalise on growth opportunities.”

Incentivising growth

Clearly, there is a need for industry-wide improvements.

Bsaibes says the most impactful change would be longer-term transparency across developers’ project pipelines. 

“This approach contrasts with the unpredictable, stop-start demand cycles currently prevalent in the industry. 

“It involves providing the supply chain with visibility into funding-backed plans over a three to five-year period. Such transparency is crucial for better resource planning and timely project delivery,” he adds.

Bsaibes also emphasises the importance of incentivising suppliers, subcontractors and contractors to scale up their capacity. “This will help them grow in a coordinated manner through financial/regulatory support from the government.”

Another area of improvement is the digitisation of government processes, although Bsaibes notes that progress is already being made.

Bsaibes also calls for changes in Saudi Arabia’s regulatory environment.

The continued maturation of Saudi Arabia’s evolving regulatory framework will reduce the complexities faced by international firms. Yet, greater alignment with global construction norms will stimulate competition and investment in the kingdom’s expanding market.

According to Bsaibes, transitioning contract law closer to international standards, such as those outlined by the standards organisation International Federation of Consulting Engineers (FIDIC), would significantly mitigate risks for new market entrants. Presently, the reliance on sharia law introduces an element of unpredictability into obligations, he says.

To achieve this, he recommends adopting contract laws aligned with common law systems, such as the UK’s, to provide foreign suppliers and partners with a clearer understanding of their obligations.

Bsaibes concludes that while the continued evolution of Saudi Arabia’s regulatory environment will take time, gradual alignment with international construction norms will ultimately ease risks and costs for both local and global industry players.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11449096/main4309.jpeg
Sarah Rizvi

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

Click here to register
Exclusive from Meed
Related Articles
  • Bahrain construction activity remains subdued

    5 November 2026

     

    Bahrain’s construction and infrastructure sector remains subdued, with project awards still depressed despite a modest uptick this year.

    Data from regional projects tracker MEED Projects shows that $737m-worth of construction and infrastructure contracts had been awarded in the kingdom by 29 October 2026. While this exceeds the $686m recorded across the whole of 2025, it confirms that the market remains in a prolonged downturn.

    Between 2016 and 2020, Bahrain recorded more than $2bn in annual awards, peaking at nearly $3.9bn in 2016 when major packages for the Bahrain International airport expansion were signed. Awards then fell to $912m in 2021 before rebounding to almost $2bn in 2022. The recovery was short-lived, with awards declining to $1.66bn in 2023, $1.57bn in 2024 and $686m in 2025.

    Major awards

    Activity this year has been supported by several housing and transport packages.

    The largest award was an estimated $400m contract secured by a joint venture of local developer Naseej and China Machinery Engineering Corporation for the Madinat Khalifa project. Procured under the Mega Government Land Development Programme, the scheme involves the design, financing, construction, marketing and sale of more than 2,500 housing units on two government-owned land parcels, alongside roads and electricity, water, sewage and drainage networks.

    Road infrastructure also produced a major commitment. The Ministry of Works amended its award for package four of the Busaiteen Link project, appointing a joint venture of Nass Company and Nasser Hazza Al-Subaei Contracting Company under a BD65m ($172m) contract. The three-year deal replaces a BD69.7m ($185m) award made in January to a consortium of Haji Hassan Group, Saudi Arabia’s Alomaier Trading & Construction Company and Greece’s Terna.

    The package includes a signature bridge connecting Muharraq with the North Manama Causeway and Bahrain Bay, as well as road works between junctions four and five.

    Residential projects provided further volume. Mohammed Abdulmohsin Al-Kharafi & Sons secured a $112.4m contract to build 512 social apartment units on Madinat Salman’s Island 12. Binaa Al-Bahrain also appointed Kooheji Contractors to build Bayview in Manama, a development comprising four residential buildings and 489 apartments.

    Early-stage commitments included a BD5m ($13.5m) consultancy contract awarded to US-based Populous for the planned Sports City at Sakhir. The scope covers the masterplan, internal infrastructure, phase 1A design and tender documents. Lebanon’s Dar Al-Handasah won a QR28m ($7.7m) contract to conduct feasibility studies for the proposed 40-kilometre Qatar-Bahrain Causeway, also known as the Friendship Bridge.

    Transport links

    Transport is the most promising near-term outlet for the market, with a pipeline valued at about $15bn, according to MEED Projects data.

    Cross-border rail has re-emerged as a strategic focus. Bahrain has introduced legislation to establish a framework for constructing, operating, maintaining and regulating railway networks, including licensing, safety, cross-border services, and passenger and freight tariffs.

    The move comes as Gulf states prepare to advance the GCC railway network, which is expected to begin operating by the end of 2030. Bahrain’s proposed rail link to Saudi Arabia is expected to run via the planned King Hamad Causeway, a second fixed connection between the two countries alongside the King Fahd Causeway.

    Road expansion is also progressing. In September, the Bahrain Tender Board received bids from Nass Contracting, Haji Hassan Group, Almoayyed Contracting Group, Mohammed Abdulmohsen Al-Kharafi & Sons, Eastern Asphalt & Concrete Production, Cebarco Bahrain and Kingdom Asphalt for the upgrade of two kilometres of the Sheikh Jaber Al-Ahmed Al-Sabah Highway. The works involve a four-lane dual carriageway with service roads.

    Industrial and maritime infrastructure is advancing, too. The Ministry of Works received five bids for engineering and quantity surveying services linked to reclamation works at Salman Industrial City and Bahrain Logistics Zone.

    Dar SSH International Engineering Consultants submitted the lowest offer at BD778,580 ($2.1m), followed by Aecom at $2.2m, Ansari Engineering Services at $2.3m, Millet Engineering Bureau at $2.4m and Ayesa at $2.8m. The project involves reclaiming about 1.13 million square metres of land using 9.67 million cubic metres of fill near Khalifa Bin Salman Port.

    The government is also preparing the Bahrain Northern Link Road as a public-private partnership. The 29.5km highway will connect the North Manama Causeway with Suhaila Island and the King Hamad Causeway, creating a parallel east-west route to Sheikh Isa Bin Salman Highway and improving links between Khalifa Bin Salman Port and Saudi Arabia.

    Building pipeline

    Outside transport, Bahrain’s construction pipeline exceeds $6bn. The most prominent project is the Bahrain International Sports City development in Sakhir. In September, 21 local and Saudi Arabian contractors were prequalified for the first-phase construction contract, which is expected to include Bahrain’s largest sports stadium and a multipurpose indoor sports arena.

    The planned National Assembly Building in Manama is another significant civic project. Bids submitted earlier this year included three options from Cebarco Bahrain, ranging from $163.8m to $200.3m, alongside offers of $239.4m from Nass Contracting and $316.4m from Kooheji Contractors.

    The four-storey complex will be built on a reclaimed island and will include a main hall for joint sessions, separate debating chambers, administrative offices, an auditorium, library, museum, meeting rooms, public spaces, underground parking and supporting facilities.

    These projects provide a route out of Bahrain’s multi-year downturn. The market’s recovery, however, will depend on whether the government converts feasibility studies, advisory mandates and prequalification exercises into construction awards.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21181473/main.gif
    Yasir Iqbal
  • Bahrain creaks under the strain of war

    5 November 2026

     

    With a small economy and exports almost wholly reliant on passage through the Strait of Hormuz, Bahrain has been painfully exposed to the turmoil caused by the Iran war. The country’s social makeup – with a Shia majority ruled by a Sunni-dominated regime – is also showing signs of strain.

    The economy is expected to contract by 11.3% this year, according to the IMF’s latest Regional Economic Outlook report. That is not quite as bad as some of its neighbours, such as Kuwait and Qatar, but it is well above the 4.8% fall expected for the GCC as a whole.

    Just as importantly, Bahrain also starts from a much weaker base than its Gulf peers, with a smaller economy, limited hydrocarbon resources and high levels of government debt.

    “Countries with the largest reserve declines since the start of the conflict generally entered the shock with comfortable reserve positions, with Bahrain as a notable exception,” the IMF noted in its 22 October report.

    Physical disruption

    Iran’s closure of the Strait of Hormuz this year has cut Bahrain off from its most important trade route for both exports and imports. In addition, major industrial and military targets have been hit by Iran on multiple occasions, including the US naval base and the Aluminium Bahrain (Alba) plant.

    The latter suffered a 32% year-on-year drop in sales volumes and a 61% fall in output in the first half of the year as a result of the Iranian attacks – although higher aluminium prices and lower costs meant that the company’s revenues held steady and profits actually increased year-on-year.

    Other areas of the economy have been badly affected too, with the Bapco oil refinery, a desalination plant and an Amazon data centre all hit in Iranian strikes. The IMF also noted that Bahrain has seen one of the worst declines in hotel occupancy rates during the year. Inflation has also been rising, reaching an annual rate of 3% as of July.

    As a result, the government’s already weak financial position is under even more pressure. The Central Bank of Bahrain’s reserves have slumped sharply since the start of the war, falling from BD1.8bn ($4.8bn) as the war broke out, to a low of BD568m three months later. They recovered some of the ground lost in the following months, but remain well below the pre-war level. Reserves stood at BD887m by September, supported by drawing on a BD2bn ($5.4bn) currency swap line provided by the UAE in early April.

    Total public debt had reached BD20.3bn at the end of August, the most recent data available, up from BD18.2bn a year earlier. That is significantly larger than the country’s GDP, which stood at BD15.7bn in 2025 and is expected to end this year at just BD13.9bn.

    To make matters worse, the markets have been pushing up Bahrain’s borrowing costs to levels not seen since 2018, when the government had to turn to Kuwait, Saudi Arabia and the UAE for a bailout to avoid a potential sovereign default.

    External support

    With no easy way to reduce its debts or plug its budget deficit, Bahrain is likely to seek more assistance from its wealthy neighbours – although any aid will likely come with demands for spending restraint and other reforms that will be uncomfortable for the government to accept.

    The appetite of some neighbouring states may also be more limited than in the past, given their own economies have been weakened by the war, but King Hamad Bin Isa Al-Khalifa’s close ties with the UAE leadership in particular are likely to ensure some help is forthcoming.

    Asharq Bloomberg reported in late October that Manama has been holding talks with neighbouring states for a fresh round of support, with the UAE expected to emerge with a leading role. However, the timing and scale of any bailout remain unclear.

    Without external assistance, the country’s finances are likely to deteriorate further. Ratings agency Capital Intelligence said in an October report that it expected debt levels to rise further in 2027-28, with the budget deficit averaging 9.3% of GDP in those years.

    “The burden of government debt on the budget is also very high, with interest payments projected to average 30.7% of revenues in 2026-28, up from 27.1% in 2025,” it noted.

    King Hamad Bin Isa Al-Khalifa’s close ties with the UAE leadership in particular are likely to ensure some help is forthcoming

    Political tensions

    Politically, Manama has appeared increasingly cautious towards its own citizens, with planned elections for both municipal councils and the Council of Representatives delayed until next year. Announcing the postponement of the council elections in mid-October, deputy prime minister Sheikh Khalid Bin Abdulla Al-Khalifa referred vaguely to “the current circumstances and their resulting effects” as the reason for the delay.

    The postponement removes a formal channel for the public to express grievances about the country’s current situation. At the same time, the authorities have moved against perceived support for Iran during the conflict. More than 600 people have been arrested this year on charges including espionage and supporting an enemy state, according to the Bahrain Institute for Rights and Democracy (Bird), a London-based advocacy group that is critical of the government. Dozens of people have also had their citizenship revoked.

    “Since the outbreak of the Iran war, repression in Bahrain has intensified sharply,” said Bird advocacy director Sayed Ahmed Alwadaei.

    Some analysts warn that the crackdown could prove counterproductive. The Bahrain researcher at conflict monitoring group Acled said that tensions between the government and its Shia opposition were gradually placing the country at high risk of instability.

    The economic outlook could change quickly if a resolution to the Iran-US conflict is found. The IMF predicts that the economy could rebound to a growth rate of 13.9% next year, before settling back to a more sustainable 3.1% the year after – but that depends on Gulf trade routes reopening and energy production normalising. The country’s political tensions will be harder to resolve.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21173733/main.gif
    Dominic Dudley
  • Sharjah opens first phase of new Dubai road connection

    5 November 2026

    Sharjah’s Roads & Transport Authority (SRTA) has partially opened the first phase of a major road development project designed to improve connectivity between Sharjah and Dubai.

    The initial opening includes the partial launch of the Al-Taawun interchange, alongside several bridges and junctions providing one-way traffic flow from Sheikh Mohammed Bin Zayed Road toward Expo Centre Sharjah.

    Tunnel construction in the Al-Taawun area is also progressing under the scheme. The 500-metre-long tunnel will run beneath the Al-Taawun roundabout, providing three lanes in each direction to link Al-Taawun Street to Al-Nahda Bridge and onward to Dubai.

    The project will also include a signalised intersection designed to handle approximately 4,200 vehicles an hour in each direction. In addition, the tunnel will provide access to Expo Centre Sharjah and form part of a transport corridor linking to Al-Noor Road.

    The Al-Taawun tunnel project is the centrepiece of a broader AED750m ($204m) road development programme in Sharjah, which comprises a network of tunnels, bridges and intersection upgrades.

    The other projects that form part of the programme include:

    • Al-Noor Road: Extends from Al-Orooba Street into Dubai via Al-Nahda Bridge, serving residential and commercial communities in Sharjah and adjacent districts in Dubai.
    • Industrial Streets 1 and 2 bridges: Involves constructing two 130-metre-long bridges with two lanes in each direction. These will connect to Maleha Road, Sheikh Khalifa Bin Zayed Road and Al-Waset Road, adding capacity of roughly 2,800 vehicles an hour in each direction.
    • Industrial Street 3: Encompasses two new bridges linking Sharjah’s industrial zones to the Ring Road. The 2.7-kilometre scheme will add dedicated turning lanes toward Maleha Road, Sheikh Khalifa Road and Al-Dhaid Road, along with a culvert linking Industrial Street 3 to the Ring Road. It will increase capacity by about 5,200 vehicles an hour across both directions, improving links between Sheikh Mohammed Bin Zayed Road, Al-Khan Street and Al-Ittihad Road.
    • Sheikh Mohammed Bin Zayed Road Interchange: Entails upgrading the existing interchange to improve connections between the highway and the Al-Taawun, Al-Khan and Al-Buhaira districts.

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21172614/main.jpg
    Yasir Iqbal
  • Engie completes refinancing of Oman power plants

    5 November 2026

    French developer Engie has announced that it has reached financial close on the refinancing of the Sohar 2 and Barka 3 independent power projects (IPPs) in Oman.

    The transaction follows 15-year extensions to the plants’ power purchase agreements (PPAs) in March, securing their long-term operations through to 2043.

    As previously reported by MEED, the new agreements for the 750MW Sohar 2 and 750MW Barka 3 IPPs will take effect on 1 April 2028. 

    The refinancing aligns the projects’ debt profiles with the extended PPA terms and establishes a long-term financing framework to support future capital expenditure. This includes refurbishment works aimed at improving the reliability and long-term performance of both assets.

    Al-Batinah Power Company and Al-Suwadi Power Company operate the Sohar 2 and Barka 3 power plants, respectively.

    According to regional projects tracker MEED Projects, Nama PWP signed the original PPA for the Barka 3 project in 2010 with a consortium led by Gaz de France (GDF) Suez under a special purpose vehicle called Al-Suwadi Power Company.

    The shareholders comprised GDF Suez (46%), Bahwan Engineering Company (22%), Shikoku Electric Power Corporation (11%), Sojitz Corporation (11%)  and the Public Authority for Social Insurance (10%).

    In 2015, GDF Suez was rebranded as Engie following a strategic shift towards low-carbon energy and utilities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21170932/main.jpg
    Mark Dowdall
  • Aramco seeks to expand East-West crude pipeline

    5 November 2026

    Saudi Aramco is planning to expand its East-West oil pipeline network, aiming to strengthen the kingdom’s ability to transport crude oil while bypassing the Strait of Hormuz.

    Aramco operates the 1,200-kilometre East-West pipeline from Abqaiq in the Eastern Province to Yanbu on the Red Sea coast. The pipeline currently has an oil transportation capacity of 7 million barrels a day (b/d).

    The pipeline was targeted by Houthi missiles in September and by Iran in April. Aramco resumed crude oil exports through the pipeline at the start of October.

    “With regard to the expansion to our East-West pipeline and the additional networks that we are building, this work has already started,” Amin Nasser, Aramco’s president and CEO, told analysts on a call following the company’s announcement of its Q3 2026 financial results on 3 November.

    Nasser had previously said in an interview with Al Arabiya Business that Aramco had begun engineering work on the East-West pipeline expansion project during the early stages of the US-Iran conflict.

    In October, Saudi Energy Minister Prince Abdulaziz Bin Salman said that the kingdom was looking to expand its crude oil export capacity by pipeline to as much as 10 million b/d. The plans would involve repurposing a domestic gas pipeline and investing in the existing East-West pipeline network.

    Aramco uses three main routes to export crude oil: the Gulf, via the Strait of Hormuz; the Red Sea, via the Bab El-Mandeb strait; and the Mediterranean, via Sidi Kerir in Egypt. The company also uses overseas oil-storage facilities in South Korea, Japan, the Netherlands and Sidi Kerir, and is working with partners to expand storage capacity, particularly in Asia.

    Aramco is also undertaking engineering work on additional export routes, Nasser said.

    He added that the company would not disclose details of the proposed routes until it made final investment decisions.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21156806/main0615.jpg
    Indrajit Sen