Saudi Arabia's $35 billion construction boom

The changing skyline along Jeddah's cornice and in Riyadh with its landmark 70-storey Al-Faisaliah tower are witness to the acceleration in construction activity throughout the Kingdom in recent years. More than $1 billion of hotel and office building projects in Riyadh alone are being developed.

Population growth and surging oil revenues are the key dynamics stimulating both public and private sector investment in construction projects. The government now has more than sufficient resources to embark on long-planned improvements and a long awaited expansion of infrastructure, transport and municipal services.

The building boom is also being spurred by planned government investments to expand the country's electricity network and water supplies. Just the construction element attached to power supply development is estimated at nearly $700 million.

$35bn building programme

In total, current infrastructure and public sector building programmes are valued at some $35 billion. Plans include building 600 new factories, schools, doubling desalination capacity, increasing electrical generation and distribution. Some 600,000 new homes are to be built in the next four years with many more planned.

Jeddah Chamber of Commerce and Industry has estimated that the Kingdom requires at least 1 million new homes in the next five years to address population growth needs. Similarly the Ministry of Education has outlined a $4 billion plan to build another 4,000 schools.

There is particularly high demand for housing in the fast expanding capital Riyadh. One estimate is that overall the Kingdom will need to go much further with its housing programmes, both government and privately sponsored, than even currently envisaged. Some estimates calculate a need to double the number of houses and apartments to 9 million in the next 15 years to cope with projected demand.

Other social requirements such as new hospitals and clinics, education as well as housing are big items on the government agenda while real estate, office and shopping mall investments and tourism projects are the focus of the private sector.

This is and other construction activity is boosting cement producers and other parts of the building materials sector. There are major opportunities for investment in these areas and in training services for skilled workers such as electrical and mechanical engineers.

Jobs for Saudis

At present Saudis comprise about 20% of the estimated 145,000 engineers of various types employed in Saudi Arabia. There are also some 1,300 Saudi professional architects practising in the Kingdom.

Tourism is another emerging sector beginning that is to provide substantial construction work. A $1 billion seafront venture over 3.4 million square metres reclaimed land between Al-Khobar and Dammam is planned to provide houses, apartments, hotels, a marina, shopping as well as a man-made lagoon.

There is discussion as well between the Egyptian and Saudi authorities on a $3 billion project to build a causeway across the Red Sea to provide a road link between Dibah and the Egyptian port of Sharm Al-Sheikh.