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Saudi Arabia leads global construction activity with $1.5 trillion pipeline

Despite the optimistic outlook, JLL recognizes potential challenges such as increasing inflation, higher interest rates, and geopolitical tensions.

Saudi Arabia leads global construction activity with $1.5 trillion pipeline
[Source photo: Krishna Prasad/Fast Company Middle East]

A new report paints a picture of Saudi Arabia’s construction sector as a global leader driven by the country’s economic diversification efforts and the potential challenges that need to be addressed to sustain this momentum.

JLL, a real estate services company, reveals Saudi Arabia as the world leader in construction activity for the first quarter of 2024. The kingdom has a $1.5 trillion pipeline of unawarded projects, representing 39% of the entire Middle East and North Africa (MENA) construction market valued at $3.9 trillion.

“Economic growth, burgeoning population, and modernization have made Saudi Arabia the most active player in the Middle East construction market, with the real estate sector leading the kingdom’s projects market in 2023,”  said Laura Morgan, JLL’s market intelligence lead for the region.

The report underscores Saudi Arabia’s projected economic growth of 2.1% and 5.9% in 2024 and 2025, respectively. This positive outlook is further bolstered by the country’s progress on megaprojects and vital infrastructure developments leading up to the upcoming EXPO 2030. J

JLL emphasizes that these factors have solidified Saudi Arabia’s position as a global construction leader.

Despite the positive outlook, the report acknowledges potential challenges, including rising inflation, interest rates, and geopolitical tensions. The report also notes that while Saudi Arabia saw the highest value of awarded projects in 2023 (totaling $97 billion, a significant increase from $60 billion in 2022), the industry faces potential headwinds.

Market dynamics such as construction cost fluctuations and a shortage of skilled labor could pressure the sector’s robust growth. The report also highlights the lingering shortage of skilled professionals and general labor as a significant risk. 

The report suggests a medium- to long-term outlook for improved local manufacturing capabilities fueled by the demand generated by major projects in the kingdom.

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