Riyadh, Asharq Al-Awsat—Saudi economists say growth in the country’s construction sector is a major driving force in Saudi Arabia’s economic performance.
Economist Dr. Abdul Rahman Baeshen, president of the Al-Shorouq Center for Economic Studies in Jizan, told Asharq Al-Awsat: “All signs confirm that the construction sector is receiving the greatest amount of investment out of all sectors.” He added that he expects the Saudi construction sector to witness 20 percent growth by the end of the current year.
Baeshen stressed that this year, there is a general Saudi tendency towards expansion and development, particularly in the construction sector. He added that the Saudi government has exerted significant effort to boost this sector.
The Gulf construction market is presently valued of USD 1.5 trillion, making it one of the most buoyant construction markets in the world. Saudi Arabia accounts for a total of USD 629 billion of this figure, making it the largest construction hub in the Gulf.
Earlier this month, Saudi Arabia announced the construction of a new residential and administrative city in the Mecca governorate, to be named Mecca Gate. The city will reportedly span an area of 893 square feet (83 million square meters), and will include educational institutions, government offices, residential units and a national park.
For his part, Mohamed Al-Hamadi, a member of the Riyadh Chamber of Commerce and Industry, told Asharq Al-Awsat that the Saudi construction sector enjoys a high level of financial flexibility, particularly thanks to stimulation from the national economy and investment.
Hamadi said that a significant proportion of domestic and Arab investment in Saudi Arabia takes place via the construction sector, adding that 2014 could be an even better year for Saudi construction. Hamadi claimed that the investment sector in the Gulf Cooperation Council (GCC) states is the strongest in the world today.
Earlier this week, the Saudi labor ministry announced that the number of visas issued to the country’s construction sector accounted for 58 percent of all work visas issued by Saudi Arabia last year. In 2012, Riyadh issued approximately 1.6 million work visas, of which 900,000 were allocated to the construction sector.
However, other reports claimed that the initial growth in the domestic construction sector is likely to be counteracted by a subdued performance in the second half of the year.
Approximately USD 442 billion of projects were in the design, bidding or construction stage in Saudi Arabia, according to data compiled by the Zawya business website for the period ending July 2013. However, Saudi Arabia’s construction industry has witnessed a significantly lower growth rate since July 2013, which has been attributed to delays in project implementation as a result of changes in labor laws governing foreign workers.
Speaking to the Saudi Gazette, CEO of DC Pro Engineering, George Berbari, said: “The corrective measures [being] undertaken by the Saudi Ministry of Labor to legalize the status of foreign workers is understandably a good and necessary initiative.”
“However, it led to a shortage of manpower and a 20 percent drop in construction activities,” he added.