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This surge is part of the Kingdom's Vision 2030, which aims to deliver significant urban transformation and establish Saudi Arabia as the largest construction market globally.
According to Knight Frank's recent Saudi Construction Landscape Review H1 2024 report, the construction output value for various sectors—including residential, institutional, infrastructure, industrial, energy, utilities, and commercial—has reached $141.5 billion, marking a 4.3% increase compared to the previous year. This growth is set to continue, with forecasts predicting a total construction output value of $181.5 billion by the end of 2028.
One of the major highlights of this construction boom is the plan to build 660,000 new homes by 2030. This ambitious target is part of a broader vision that includes the development of over 320,000 hotel rooms, 5.3 million square meters of retail space, and 6.1 million square meters of new office space. The aim is to attract over $3 trillion in investments by 2030, transforming Saudi Arabia into a global hub for tourism, commerce, and trade.
The residential sector dominates the construction output value, accounting for 31% (approximately $43.5 billion) in 2023, and is projected to increase to $56.9 billion by 2028. Following closely is the energy and utilities sector, which is expected to grow from $35.1 billion to $46.5 billion within the same period.
Riyadh Province stands out with 38% of the existing contract award value, equating to $54 billion, followed by Mecca and Tabuk provinces at $28.7 billion and $28.5 billion, respectively. The transportation sector is also receiving significant investment, reflecting the government's commitment to enhancing infrastructure to support a growing population projected to reach 10 million by 2030.
Knight Frank's analysis of residential construction costs highlights a variance in construction costs across different residential categories, influenced by the scale, quality, and type of construction projects. The cost to deliver the planned 660,000 homes by 2030 is estimated to be at least $175 billion.
In addition to residential developments, the emergence of new super-cities, particularly Giga projects, is a visible impact of Vision 2030. These projects, mainly concentrated in Western Saudi Arabia, account for 55% of the total $1.25 trillion development plan and are expected to drive extensive growth in luxury residential supply, hotel accommodation, retail, and office space.
Source: Arabian Business
