The 966 and host, Richard Wilson welcome to Episode #134 Laura Morgan, Market Intelligence Lead, MEA, JLL to discuss Saudi Arabia’s Booming Construction Sector. Ms. Morgan expands on JLL's Q1 2024 KSA Construction Market Intelligence Report which noted that with $1.5 trillion in the Saudi pipeline of unawarded construction projects, Saudi Arabia accounts for almost 40% of the total MENA pipeline value. Within that pipeline the construction sector represents $950 billion (62% of the total $1.5 trillion), while transportation, infrastructure, and other utilities account for $582 billion (38%).

According to MEED Projects, the thriving KSA construction sector reported the highest value of awarded projects in 2023, reaching USD97 billion compared to USD60 billion in 2022. Aligning with the Kingdom’s Vision 2030 economic diversification and investment goals, this value represents only 6% of the potential pipeline, highlighting substantial opportunities within the sector.

Join us for another timely and informative episode of The 966.

Summary

Laura Morgan, Market Intelligence Lead Middle East, and Africa for JLL, discusses JLL's latest KSA Construction Market Intelligence Report and the construction market in Saudi Arabia. The report highlights the potential for GDP growth in Saudi Arabia, driven by Vision 2030 giga projects and infrastructure developments. The report also examines the construction pipeline, awarded and unawarded projects, and the challenges faced by the sector. Laura emphasizes the importance of data and transparency in understanding market trends and risks. She also discusses the progress of economic diversification in Saudi Arabia and the impact of rationalization efforts on the contracting sector.

Keywords JLL, KSA Construction Market Intelligence Report, Saudi Arabia, construction market, Vision 2030, infrastructure developments, GDP growth, construction pipeline, awarded projects, unawarded projects, challenges, data, transparency, economic diversification, rationalization, contracting sector.

Takeaways

• Saudi Arabia's construction market is experiencing significant growth, driven by Vision 2030 projects and infrastructure developments.
• The construction pipeline in Saudi Arabia is substantial, with a value of around $1.5 trillion, and there is still a large portion of projects in the design and pre-qualification phases.
• Data and transparency are crucial in understanding market trends and risks in the construction sector.
• The efforts to build up local contracting capability in Saudi Arabia are progressing, but there is still a need for skilled labor, particularly in the MEP sector.
• Despite challenges such as inflation and geopolitical tensions, Saudi Arabia remains committed to its Vision 2030 goals and the construction projects associated with it.

Titles

• Data and Transparency: Understanding Market Trends and Risks
• The Construction Pipeline: A Look at the Projects in Saudi Arabia

Sound Bites

"Saudi Arabia's progress on numerous Vision 2030 giga projects and infrastructure developments has cemented the kingdom's position as a leader in construction activity regionally and globally."

• "Around 5% of the pipeline projects in Saudi Arabia are under a main contract, while the remaining 94-95% are in the design and pre-qualification phases."
• "Despite challenges such as inflation and geopolitical tensions, Saudi Arabia remains committed to what they've announced and what they've said they want to achieve by 2030."

Chapters

00:00 Introduction and Overview of JLL and the Construction Market in Saudi Arabia

03:11 Vision 2030 and Infrastructure Developments Driving Growth

08:11 The Construction Pipeline: Overview and Status of Projects

13:12 Data and Transparency: Understanding Market Trends and Risks

15:57 Building Local Capability: Challenges and Progress in the Contracting Sector

23:14 Commitment to Vision 2030: Overcoming Challenges in Saudi Arabia's Construction Market

In Episode #133 of The 966 podcast, Dr. Jennifer Peck, Swarthmore College, expands on her excellent article in Foreign Affairs magazine (Working Women are Changing Saudi Arabia: Reforms Have Made the Economy More Productive, Families More Resilient, and Saudis More Tolerant) where she writes, "This economic transformation has also raised women’s visible participation in public life, made families more financially resilient, and boosted businesses’ productivity by increasing their access to talent. These shifts, in turn, appear to be driving a feedback loop: the more Saudi society embraces women in the workplace, the more the government is encouraged to pursue ambitious reforms."

In this episode Dr. Peck also discusses the evolution of women's participation in the Saudi labor force and the impact of reforms on the economy and society. She highlights key historical timeframes, such as the 60s, 80s, Arab Spring, and Vision 2030, that have shaped women's access to and impact on the workforce.

She also discusses the challenges and opportunities that remain, including cultural adaptation, mentorship programs, and the long-term effects of labor quotas on firms.

On the ground the latest Gaza war has caused untold human carnage and massive damage to buildings and infrastructure. It has also severely damaged the reputation of the United States in the region as well as negatively impacted US company brands. Stefanie Hausheer Ali, senior director at international affairs consulting firm Rice, Hadley, Gates & Manuel LLC and Atlantic Council nonresident fellow joins host Richard Wilson on The 966 for a deeply informative Episode #132 in which she discusses five impacts of the Gaza war to watch.

1. The reputation of the United States and US company brands have taken a major hit in the region.
2. Boycotts of certain US brands are occurring and will continue to flare up periodically.
3. Israel’s ability to bring in foreign direct investment may be diminished.
4. Arab states are pulling away publicly from the United States in some ways, but still desire close ties.
5. The potential for destabilizing regional protests and lone-wolf attacks has increased.

To read more about this topic please see Ms. Ali's excellent article published by The Atlantic Council.