Saudi Construction Sector Witnesses Rebound in Activity

Published March 18th, 2019 - 12:18 GMT
Saudi Arabia is witnessing a rebound in construction activity due to headline infrastructure workloads increasing. (Shutterstock)
Saudi Arabia is witnessing a rebound in construction activity due to headline infrastructure workloads increasing. (Shutterstock)

The latest RICS Middle East Construction and Infrastructure survey results indicate that operating conditions remain difficult; however, respondents report an increase in infrastructure workloads throughout most of the region. Despite a slightly more optimistic outlook, the region remains vulnerable to external economic shocks.

Expectations for 2019 are somewhat mixed, with respondents seeing an increase in workloads over the next 12 months, though at a more subdued pace in UAE, Oman and Qatar. Tender prices for both, building and civil engineering are expected to decline along with profit margins remaining under pressure in these countries.

Saudi Arabia, however, is witnessing a rebound in construction activity due to headline infrastructure workloads increasing, with contributors also reporting an improvement in operating conditions during Q4. The increase in infrastructure workloads was broad-based in the last quarter, with water and utility projects, road, rail and energy projects all experiencing robust growth.

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Participants in UAE reported an upturn in infrastructure workloads as well, although at a slower pace, with energy projects seeing a particular rise in activity. The outlook for infrastructure workloads over the next twelve months remains nuanced across the region, yet harbour and port projects are generally among the sub-sectors expected to see the largest increase in workloads in 2019.

New business enquiries and new workloads increased marginally in Saudi Arabia, though, Q4 in the Kingdom and the Sultanate of Oman also saw an increase in payment delays. Additionally, there was a rise in the use alternative dispute resolution (ADRs) mechanisms in the Kingdom.

A major factor holding back activity across the region, as cited by 85% of respondents in each jurisdiction, was financial constraints. Contributors to the survey similarly identified competition and a lack of demand as drags.

Saudi Arabia (52%) and Oman (42%) also face skills shortages, with contributors citing it as another significant factor holding back activity, meanwhile, in UAE this is seen as a drag by a lesser share of respondents. BIM managers remain the most in demand across the region for a second quarter, with contributors from Oman (59%), Saudi Arabia (52%), UAE (41%) and Qatar (37%) all reporting a shortage of them.

The RICS Middle East Construction and Infrastructure Survey is a quarterly guide to the trends in the construction and infrastructure markets. Respondents are asked to compare conditions over the latest three months with the previous three months, as well as their views as to the outlook. 


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