Market Trends of Saudi Arabia Construction Industry
Increase in Commercial Construction is Dominating the Market
Saudi Arabia’s construction sector has projects worth SAR 8 trillion (USD 2.1 trillion) in the pipeline for the next eight years. With 184,000 square meters of new retail developments centered on food and beverage outlets, entertainment facilities, or the public realm planned to be completed by 2025, Riyadh and Jeddah are at the forefront of a lifestyle shopping revolution transforming Saudi Arabia's retailing landscape.
With more than USD 1.25 trillion in infrastructure and property projects underway, Saudi Arabia is expected to be one of the world's most important construction centers. The Saudi Giga Projects report noted that the total value of completed infrastructure and real estate projects has reached USD 250 billion.
A hotel development portfolio of over USD 110 billion is available in Saudi Arabia. As a result, by 2030, there will be approximately 310,000 hotel rooms, with 42,033 currently under construction. With only more Chinese and US buildings, Saudi Arabia is ranked third in the world market for hotel construction. First-class four-star properties account for 77 projects and 30,229 rooms - 46% of the total, with the remaining 54% in the five-star luxury segment, equating to 90 builds comprising 33,524 keys.
An unprecedented demand surge has been observed in the office sector, with occupancy rates rising to 97 % for Grade A offices at commercial centers such as Riyadh. In Saudi Arabia, the office sector in its three main cities, Riyadh, Jeddah, and Dammam, sees a steady increase in demand. The real star of the market is Riyadh, a business hub with unprecedented demand and occupancy in Grade A and B office space at 97% and 85%, respectively.
Increase of New Port Development Leading the Market
As a sign of the Kingdom's success in developing its maritime sector, Saudi ports increased their annual container handling by 9% to 11,380,302 units in 2023. This represented an increase of 10,439,620 containers compared to the 2022 total. From 2023 to 2022, Mawani achieved a 12.07% annual increase in container handling, totaling 8,443,746 compared with 7,534,307 that year. The body’s cruise ship containers also saw a yearly increase of 8.96%, reaching 3,237,490 in 2023.
In 2023, Mawani signed agreements to establish five new logistics parks and centers with an investment exceeding SAR 4 billion (USD 1.06 billion). These agreements included the development of logistics parks at King Abdulaziz Port in Dammam, an integrated warehousing facility at Jeddah Islamic Port, and a comprehensive bunkering station at King Fahad Industrial Port in Yemen.
By adding 28 new maritime services connecting Saudi ports to eastern and western seaports, Mawani has continued its efforts to support global trade. The authority has entered into 16 partnership agreements with several international ports and national entities in the public and private sectors. These are to improve the status of the Kingdom's ports internationally and regionally in marine transport.
In December 2023, EDECS announced that it was awarded significant infrastructure and road works for the Jeddah South Container Terminal in Saudi Arabia with DP World Jeddah. In support of the Kingdom's maritime logistics and transport strategy, this project will increase the capacity of the port to handle containers.
The scope of the work undertaken by EdECS is to carry out infrastructure works covering a total area of 100,000 m2, which include earthworks, pavement surfaces, road markings, electrical grids, sewage networks, fire protection networks, and reefer grants.
