According to the US-Saudi Business Council (USSBC), Saudi Arabia’s third quarter contract awards totalled US $6.7 billion. The council ascribed the outcome to changes in the building industry brought on by initiatives to realise Vision 2030 in the areas of housing, tourism, and physical infrastructure.
The value of contracts given thus far is on course to surpass 2021’s performance, according to the council, despite a decline in awarded contracts of 6% year over year during Q3. According to the report, the value of contracts awarded over the first three quarters increased by 67% to $31.9 billion.
By the end of the third quarter, the USSBC Contract Awards Index (CAI) had decreased to 188.11 points; according to the council, this was the first time since the third quarter of 2021 that the index had fallen below 200 points. According to the research, even if the CAI dropped, the construction industry would still be experiencing growth because it is still far above the 100-point barrier that separates expansion from contraction.
According to the council, the CAI increased by 73.27 points (up 64%) YoY and declined by 41.88 points (down 36%) QoQ. As per reports, the CAI’s performance over the first three quarters shows how healthy the construction industry is once again as the value of active construction projects keeps rising. The research said that although construction activities lagged behind the CAI, the value of completed projects saw a sizable recovery after bottoming out in 2020.
The viability of projects already in the execution stage as well as initiatives that are on the short-term horizon have been assisted by the progressive decline in construction material costs and increased demand for cement. In the years to come, when VRPs are anticipated to be delivered, construction activity will be kept afloat by the granting of mega-projects across sectors, the USSBC stated.
The council claims that after a weak second quarter, the real estate sector recovered in the third quarter, awarding 15 contracts totalling $3.3 billion. According to reports, mixed-use real estate took the lead with one $2 billion contract, followed by residential real estate with eight $1.1 billion deals, commercial real estate with four $146 million deals, and hospitality with two $145 million deals.
The real estate industry grew overall by $1.7 billion, or 102% YoY, and $3.1 billion QoQ during the third quarter. Real estate received $6.1 billion (19% of the total) in awarded contracts during the first three quarters of 2022 (YTD), placing it third among sectors after oil and gas and transportation.
The value of contracts awarded in the real estate sector increased by $2.6 billion, or 73%, year over year. AMF estimated that the construction industry was valued at $187 billion as of late December 2022.
In a statement about the transportation industry, the council claimed that despite a decline in contract wins during Q3, the industry nevertheless performed second best with a value of $912 million. The four infrastructure and earthwork packages from Neom for The Line’s high-speed rail link accounted for the majority of the 12 contracts awarded during the quarter.
The transportation industry was determined to have grown by $208 million, or 30% YoY, despite a $5 billion QoQ fall. The transportation industry received $8.7 billion in contract wins, or 27% of the total, which is the highest percentage on a year-to-date basis.
With a $2.2 billion, or 303%, gain year over year, the transportation industry continued to grow significantly faster than the rate of the previous year.
Keywords- Vision 2030, Construction Material Costs, Increased Demand For Cement, USSBC Contract Awards Index, Active Construction Projects.