Saudi Arabia Construction Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Saudi Arabia Construction Market Size

Saudi Arabia Construction Market Trends & Growth Drivers

Technological Advancement Is Foremost Trend

• Technological advancements are a crucial aspect contributing in the evolution of the construction market of Saudi Arabia. This industry is using advanced materials and construction methods, which include prefabricated and modular building techniques, which help in cost reduction, low waste, and improved project timelines.
• Contractors are extensively adopting automated equipment, including robots as well as AI-controlled drones, for real-time data collection, mapping, surveying, and monitoring. They improve the overall accuracy and safety, while enhancing the efficiency of the development phase.
• Smart technologies are being integrated into buildings and other pieces of infrastructure, for even higher sustainability. These technologies include smart sensors, low-power-consumption systems, and automated controls, which align with the broader goal of developing smart cities, utilizing technology for optimized resource management, and improving urban functionality.

Economic Transformation and Vision 2030 Are Key Drivers

• Vision 2030 is a major force shaping the construction market in Saudi Arabia. It is a national development plan meant for diversifying the economy, lowering the reliability upon oil, and building a sustainable environment for the population. This initiative involves development in various sectors, thereby giving a boost to real estate contractors.
• This plan aims to make Saudi Arabia a technologically advanced and globally competitive nation via various megaprojects, smart cities, and modern infrastructure. Therefore, the kingdom is experiencing a rise in the number of residential, commercial, and industrial projects, which are vital to support its economic transformation goals.
• The development of cities such as Neom and Qiddiya is boosting the overall market as it aligns with the Vision 2030 plan. Neom is a USD 500-billion hub for technology, entertainment & culture, education, healthcare and overall tourism, while Qiddiya is a USD 9.8-billion project aiming at becoming the largest entertainment destination in the kingdom, offering parks, sports, and other cultural attractions. These projects, as well as others under the Vision 2030, are responsible for driving the construction market, technological advancements, and employment opportunities.
• As per the Saudi business newspaper Al-Eqtesadiah, the highest percentage of workers in the industry are expatriates, making up around 85.4% or 2.1 million workers. The construction industry employs 369,600 people, of whom 14.6% are Saudi nationals. The industry also employs 152,500 women, among whom Saudi women are present in the largest proportion.

Shortage of Skilled Laborers Is Restraining Factor

• The shortage of skilled laborers is a significant issue faced by Saudi Arabia, as the local workforce often lacks the required skills and training necessary for project management, engineering, and advanced execution.
• This country is mostly dependent on overseas workers, especially in the case of the construction industry, as it involves complex methods. Due to the various economic and geopolitical factors that plague the MEA region, the kingdom faces a perpetual scarcity of skilled laborers.
• The inadequately skilled laborers often lead to project delays, quality issues, and high costs, which could negatively impact the entire profitability and efficiency of development projects.
• The construction market is itself evolving; hence, qualified professionals and skilled workers, who have both technical skills as well as can adapt to the emerging technologies to drive growth, are required.

Saudi Arabia Construction Industry Outlook

Sector Insights

• The residential category is expected to grow fastest with a CAGR of 5.9% during the forecast period. This is due to the large population and significant requirement for housing in major cities, such as Riyadh, Jeddah, and Dammam. Various kinds of units come under this category, such as apartments, villas, hostels, and farmhouses.
• Saudi government bodies have launched various programs to build houses under Vision 2030, in order to provide people with a better quality of life, safety, and security.
• According to a U.S. government body, the Saudi government has introduced a nationwide housing strategy for addressing the scarcity of affordable housing for its citizens. The plan involves building over 1.5 million new homes at an estimated cost of almost USD 80 billion.
• Commercial category holds the largest share of 45% in 2024. Commercial real estate development is gaining traction due to the economic transformation initiatives and public–private partnerships. The Vision 2030 initiative has created multiple commercial construction opportunities, which would drive the growth of the business sectors and attract professionals from other countries.
• The large population, rapid urbanization, and high influx of tourists are fueling the demand for commercial spaces, such as hotels, shopping centers, corporate offices, and entertainment venues. The changes in people’s lifestyles and spending patterns are also propelling the market growth.

The sectors included in this report are:

• Commercial (Largest Category)
• Industrial
• Civic Infrastructure
• Residential (Fastest-Growing Category)
• Energy & Utilities

Construction Type Insights

• The new category is the largest in the market, with a share of 55%, in 2024, and also the fastest-growing. This is due to the various megaprojects being developed under the Vision 2030 program, a strategy for economic transformation, developing global connections, and positioning the kingdom on top in various sectors.
• New construction in the country is now characterized by technologically advanced equipment and environmentally sustainable materials. The growing level of urbanization and rising population require extensive commercial and residential construction.
• The growing focus of the government on building new transportation networks, to enhance regional and local connectivity, such as Riyadh Metro, mandates significant effort in construction.

The following construction types are covered in this report:

• New (Largest and Fastest-Growing Category)
• Renovation
• Repair & Maintenance

Al-Riyadh Is Largest Province

The construction industry of Al-Riyadh is the largest and most dynamic, with a share of 40% in 2024. This city is undergoing massive-scale infrastructure improvement, residential and commercial construction, and smart city investments. There is an abundance of opportunities available with a growing focus on sustainable urban building for various contractors, investors, and key companies looking to participate in the economic transformation of the city.

The kingdom is gearing up for the upcoming Riyadh Expo 2030 and actively making amendments to its Vision 2030 objectives, while majorly focusing on its Giga Project Program. This initiative consists of large-scale development in various sectors, including retail, residential, commercial, industrial, and tourism, to boost the economy and support the nation’s economic diversification. These massive projects are important for the Vision 2030 program, which is aimed at creating new jobs, economic opportunities, and cultural diversity.

The provinces analyzed in this report consist:

• Al-Riyadh (Largest Province)
• Makkah
• Al-Madinah (Fastest-Growing Province)
• Al-Qaseem
• Eastern Province
• Aseer
• Tabouk
• Hayel
• Northern Border
• Jazan
• Najran
• Al-Baha
• Al-Jouf

Saudi Arabia Construction Market Share

The construction market of Saudi Arabia is fragmented and highly competitive, as multiple international and local players are vying for government projects. This industry has an abundance of opportunities for growth and profitability, driven by the Vision 2030 initiative. Companies can build a strong presence in this rapidly developing sector by looking for ongoing trends, understanding market dynamics, and adopting technological innovations. Growth in this sector can be achieved through various strategies, including collaborations, high investments, new service offerings, and contract pursuit. The government’s focus on the creation of infrastructure in industries apart from oil & gas, as part of its effort to diversify the economy, would bring even more construction firms to the country in the near future.

Saudi Arabia Construction Industry News

• In January 2023, China Harbor was given two contracts in Saudi Arabia. The first was for the development of a new project in Riyadh, wherein the primary tasks comprised earthworks, pipeline facilities, and auxiliary facilities for homes. The other was for the reconstruction and upgrade of the first and second container terminals at Dammam Port.
• In December 2022, in the NEOM region of northwest Saudi Arabia, Bechtel was hired as the project management consultant for TROJENA, a year-round mountain attraction. In this capacity, Bechtel will offer a range of services, including construction management, technical assistance, and commercial support.
• In September 2023, Bechtel opened its new regional headquarters in the center of Riyadh.
• In February 2023, the Saudi Arabian sovereign wealth fund said that it would invest USD 1.3 billion in four domestic construction companies. AlBawani Holding Co., Almabani General Contractors Co., El Seif Engineering Contracting Co., and Nesma & Partners Contracting Co. were the companies in which the Public Investment Fund obtained shares through this project. The latest deals are in accordance with Vision 2030's goals and part of the PIF's broader plan to support and strengthen key industries in Saudi Arabia.