RIYADH: Saudi Arabia has solidified its status as a leading force in the global construction industry, demonstrating remarkable performance in the second quarter of 2024.
According to the Royal Institution of Chartered Surveyors’ Global Construction Monitor, Saudi Arabia achieved the highest Construction Activity Index reading globally at +64.
This exceptional performance underscores the Kingdom’s dominance in the Middle East and Africa region, where the overall CAI for the area was +24, reflecting a slight decrease from the previous quarter but continuing a streak of 14 consecutive quarters of growth.
The robust construction sector in Saudi Arabia is driven by an extensive pipeline of projects, amounting to $1.5 trillion, which represents 39 percent of the $3.9 trillion total construction market in the Middle East and North Africa. This broad sector includes residential, commercial, industrial, infrastructure, transportation, and energy construction, creating significant opportunities for contractors.
The construction activity in other nations also showed notable growth. Mauritius and the UAE recorded strong performances, with CAI readings of +57 and +54, respectively. However, Bahrain and Qatar faced challenges, with Qatar’s CAI at -28 indicating a continued contraction in the sector, exacerbated by a post-World Cup downturn.
RICS Chief Economist Simon Rubinsohn noted robust growth in the global construction sector, emphasizing significant expansions in India and key Middle Eastern countries like Saudi Arabia and the UAE, contrasting with stagnation in regions like China and Hong Kong.
South Africa also experienced an uptick, with its CAI rising from -2 to +11. Meanwhile, Oman and Nigeria displayed relatively positive CAI readings.
“By way of contrast, there appears to be little evidence of any turnaround in China and Hong Kong, while Qatar still seems to be suffering a post-World Cup hangover,” Rubinsohn said.
A survey of business enquiries indicated a net balance increase to +20 percent in the MEA region. Saudi Arabia (+69 percent) and the UAE (+54 percent) saw strong expansions in business inquiries, while South Africa also reported positive trends (+16 percent). However, competition for talent between Saudi Arabia and the UAE has led to increased costs, with shortages of skilled engineers affecting construction quality.
Despite these challenges, industry optimism remains high. Expectations for workload and profit margins are improving, with a pronounced acceleration anticipated in the private residential sector, which is projected to see a +32 percent increase in workload over the next 12 months. The infrastructure sector continues to lead in performance, both currently (+38 percent net balance) and in future workload indicators.
Financial pressures and skills shortages are significant challenges for the construction industry, impacting firms globally. The need to address the shortfall in housing and upgrade infrastructure to meet climate change challenges remains a critical focus.
Overall, the Saudi construction market’s robust performance and ongoing growth highlight the Kingdom’s pivotal role in shaping the future of the global construction sector.
Source: Arab News
