Saudi Arabia to award contracts worth $35 bln in 2018

Saudi Arabia is expected to award contracts worth a total value of $35 billion in 2018, a 59 percent increase from $22 billion last year, consultancy firm Faithful + Gould said in a new report.

In its Construction Market Intelligence report for the fourth quarter of 2017, the firm said the number of contracts is likely to increase this year with the award of Makkah Metro as well Saudi Aramco’s continued drive to invest $414 billion over the 10-year horizon.

Another factor driving the construction sector will be the Saudi government’s investment in infrastructure, following the allocation of SAR 205 billion in capital spending in its 2018 budget.

While the government's reprioritisation programme led the overall project pipeline to decline by $200 billion to $800 billion last year, a series of new announcements – notably the $500 billion NEOM project – has subsequently lifted the market potential size to $1.75 trillion, the report said.

The construction sector's contribution to GDP in 2017 is expected at $41.5 billion, the consultancy said, adding that the increase in the Kingdom’s budget and new project announcements adds a “level of tentative positivity” for 2018-2020.

Immediate opportunities for construction firms are likely to be in the power and water and oil and gas sectors, driven by the need to build additional capacity ahead of the development of new cities, Faithful + Gould said.