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.
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In the UAE, by contrast, Adnoc Gas has remained broadly flat at $66.7bn, with its Q1 2026 net income dropping 15% and conflict damage estimates indicating that full capacity will not be restored until 2027. Borouge meanwhile held, while Adnoc Drilling and Adnoc Distribution gained by 14% and 8%, respectively.
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Banking and industry
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Emirates NBD, up 23% year-on-year to $47.1bn, reported FY2025 record profit before tax of AED29.8bn ($8.1bn) and likewise crossed AED1tn in total assets.
Kuwait Finance House also rose by 19%, Abu Dhabi Commercial Bank 19% to $28.7bn and Saudi National Bank 11%. Qatar National Bank stalled and slid 1%, while several smaller banks saw gains. Egypt’s Commercial International Bank rose 74% to $8.4bn off a depressed base, Jordan’s Arab Bank meanwhile rose 55%, Oman’s Bank Muscat by 52% and RakBank by 32%.
Several sectors have gained significantly owing to their direct exposure to the Iran conflict’s supply-chain repricing, including logistics, fertilisers and mining.
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Marsa Maroc, the Casablanca-listed port operator, also entered the list at $6.6bn, up 85% on an African expansion that spans 34 terminals across 20 ports following a Liberia management deal signed in February.
Adnoc Logistics rose 32% to $11.6bn, while Air Arabia, the Sharjah-based low-cost carrier, joined the list at $6.1bn as it absorbed redirected long-haul flows. Nakilat, the Qatari liquefied natural gas shipping operator, was the sector’s sole softener, down 12% on slower throughput.
Mining and fertiliser entries sit alongside the logistics gainers. Jordan Phosphate Mines is the cleanest single expression of the post-Hormuz repricing visible on the list – up 127% year on year to $13.2bn, as the World Bank’s April 2026 Commodity Markets Outlook projects fertiliser prices to rise nearly 31% in 2026.
Maaden rose 23% to $65.3bn after FY2025 net profit jumped 156%, backed by record phosphate production; high aluminium output; and rising silver, copper and aluminium prices linked to artificial intelligence, data centre, solar and electric vehicle demand.
Morocco’s Managem also entered the list at $19.7bn, having almost tripled in value in the past two years on cobalt, silver and copper prices and African expansion.
Sabic Agri-Nutrients rose 44% on a 30% 2025 net profit increase, while Fertiglobe rose by 40% – both potentially anticipating a 60% forecasted rise in urea prices.
Property and other trends
The direction of the property and real estate sector has been uniformly downward. The Iran conflict has driven both a slump in UAE property sales and prices and a similar tourism-adjacent correction in Saudi Arabia. Both the Mecca-focused Umm Al-Qura and Jabal Omar development firms have seen their valuations slashed by more than a third, while Makkah Construction & Development slid by 15%.
The UAE’s Emaar Properties and Dar Al-Arkan and Qatar’s Ezdan Holding have also all seen slides of more than 15%. Kuwait’s Mabanee, which rose by 22%, is the one exception in the sector.
In Saudi Arabia’s mid-tier, Acwa Power shed 29% in value even as its revenue rose 18% and its net income 5.4%. Elm Company likewise shed 33%, Dr Sulaiman Al-Habib 19% and the Saudi Tadawul Group 21%.
Mouwasat Medical Services, MBC Group, Nahdi Medical and Saudi Logistics Services fell out of the list entirely on the same trajectory. Each had reported FY2025 earnings rises before the decline. What corrected was the valuation, not the operations.
Acwa Power’s trailing four-quarter average price-to-earnings ratio was 166x, and even after this year’s decline sits at 88x against the Saudi market average of 17.8x. Elm sits at 26x, Al-Habib at 33x, Saudi Tadawul Group at 42x – all rich by any comparable benchmark.
Many of these entries have fallen away from their peak valuations as the cooling of the gigaproject programme since early 2025 has undermined sentiment.
One example that sits on the same axis from the UAE side is Abu Dhabi National Energy Company (Taqa), which fell by 28% from $95.3bn to $69.0bn despite a 6% net income rise, even as capital expenditure also expanded by 50%.
There are now nine entries from Morocco’s Casablanca bourse against six a year ago, with an aggregate value of $74.7bn, up from $50.8bn. Industrial contractor Societe Generale des Travaux du Maroc,entered via a December 2025 initial public offering (IPO). Several Moroccan stocks have also slipped, however, including Taqa Morocco, down 42%; Maroc Telecom, down 18%; Banque Populaire, down 13%; and Bank of Africa, down 10%.
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The Multiply Group has been replaced on the list through its November 2025 merger into 2PointZero Group, which now sits in the top 30 entries at $19.6bn.
Regional repricing
Four trends underpin the list’s 7.2% recovery. The conflict has repriced specific cohorts sharply higher – logistics up 44%, mining and fertilisers up 43%, the Yanbu refiners returning, and Aramco recovering to $181bn – with gains contingent on the Strait of Hormuz remaining closed.
Regional banks have maintained last year’s momentum, with assets crossing trillion-unit thresholds and loan books supported by project activity. Six names have posted double-digit gains that are unlikely to reverse if conditions normalise.
Saudi mid-tier stocks have corrected largely on valuation rather than operations, despite many reporting earnings growth through 2025, as confidence in gigaproject-driven growth has weakened. Property has also softened in the region as conflict has reduced routine and religious tourism.
The 12-month outlook depends on whether Hormuz reopens, whether Saudi mid-tier valuations stabilise, and whether banking expansion holds under broader repricing.
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Developers win deals for $3.5bn of Mecca projects
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The Royal Commission for Makkah City and Holy Sites has awarded six real estate development deals. The projects, which cover a total land area exceeding 2.7 million square metres (sq m), will require a total investment of SR13.3bn ($3.5bn).
The sites are located within the neighbourhoods of Jurhum South, Al-Khalidiyah, Al-Hajlah, Al-Hindawiyah East, Al-Hindawiyah South and Al-Hindawiyah West. The projects will be delivered as partnerships with domestic real estate developers, institutional investors and dedicated private investment funds.
A consortium consisting of Makkah Construction & Development Company, Umm Al-Qura for Development & Construction Company and Al-Rajhi United Real Estate Company will develop the Hindawiya West and Hindawiya South districts, which have a combined area of nearly 1.15 million sq m, adjacent to the Masar Destination project. The consortium informed the Saudi Stock Exchange (Tadawul) that it received letters of award for the project on 31 May.
The initial cost of the project is estimated at SR6bn. Umm Al-Qura will act as the consortium leader and development manager, while Makkah Construction & Development Company will serve as the financial partner. The infrastructure works will be executed by Al-Rajhi United Real Estate Company as the technical partner, with the entire development financed through a private, closed-ended real estate investment fund overseen by a Capital Market Authority-licensed manager.
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Ladun Investment Company, in partnership with Al-Ayuni Investment & Contracting Company, has signed a deal for the Al-Khalidiyah district. With a targeted sales value exceeding SR6bn, the consortium will establish a closed-ended private real estate investment fund to execute extensive infrastructure works, subdivide the land plots, and handle subsequent marketing and sales. The detailed scope of works involves complete engineering designs, public park planning and utility coordination with entities such as National Water Company and Saudi Electricity Company, before a contract is signed by 9 June.
Saudi property dreams: Read the January 2026 MEED Business Review
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