Construction market to hit SAR1.12 trn by 2015

The volume of Saudi Arabia’s booming construction and contracting market is expected to hit $300 billion (SR1.12 trillion) by 2015, said Fahd bin Mohammed Al-Hammadi, chairman of the National Contractors Committee at the Council of Saudi Chambers.
“Construction is the Kingdom’s second largest economic sector after oil,” he said. In 2012, the sector contributed 16.5 percent of the gross domestic product compared to the private sector growth of 11.5 percent and GDP growth of 8.6 percent in current prices, he explained.
The construction sector’s total assets are valued at SR200 billion while the value of government contracts awarded in 2013 amounted to nearly SR157 billion. “We don’t have the correct figure of disrupted government projects,” he said. “We have to differentiate between delayed and disrupted projects,” he pointed out.
From the beginning of 2013 to its third quarter, the Finance Ministry sanctioned 1,855 contracts worth SR120.24 billion. “They included 627 contracts for operation, maintenance and cleaning with a total value of SR24.45 billion.”
Al-Hammadi said government contracts account for 65 percent of the sector’s activities. The number of registered contractors in the Kingdom reached about 115,000 by the end of 2013, which is 41 percent less than the figure of 2010 when it was 280,000. Among them 3,052 are classified contractors.
Firms licensed to provide contracting and maintenance services reached 3,487, which account for 77 percent of investment licenses in the Kingdom.
“The contracting sector is one of the important economic sectors in the country,” Al-Hammadi said. He expected the private sector’s contribution to nonoil GDP at 58.75 in 2013 while estimating actual growth in the sector at 8.11 percent.
About 34 percent of firms registered with the General Organization for Social Insurance are from the contracting sector with total participants reaching more than 2.17 million (40.1 percent of the total). The number of Saudis working in the sector has increased to 193,785. “There are about 300 job titles in the sector,” Al-Hammadi said.
Fawaz Al-Khodary, deputy chairman of the committee, said the construction sector was facing a lot of problems and emphasized the need for an authority to strengthen the sector. “We also need specialized centers to train workers required for the sector and a research center to conduct studies on better implementation of projects.”
Saleh Al-Habdan, chairman of the contractors committee at the Riyadh Chamber of Commerce and Industry, said they have presented proposals to resolve the problems facing the sector. This included setting up of a fund to finance contracting companies and sanctioning of more visas to recruit skilled foreign workers.