Saudi Arabia spending $175 billion annually on projects
Saudi Arabia is poised to allocate over $175 billion
annually towards industrial and massive projects from 2025 to 2028, igniting a
construction frenzy within the Kingdom, as reported by McKinsey & Co.
McKinsey predicts that with approximately $1.3 trillion
worth of significant projects underway, including the cutting-edge Neom city
and the Red Sea resorts on the western coast, expenditures are anticipated to
peak at around $180 billion during the years 2026 and 2027.
Saudi
real estate, infrastructure projects surge past $1.25 trillion
Saudi Arabia's ambitious "giga projects" play a
pivotal role in the Kingdom's ambition to transform into a premier tourism
destination and diversify its economy beyond oil. To facilitate these ambitious
objectives, the Kingdom has a
lready awarded $250 billion in construction
contracts since 2016. Additionally, it is launching a new airline and airport
as part of the 2030 plan, led by Crown Prince Mohammed bin Salman.
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Saudi Arabia also aims to construct 660,000 homes, nearly
matching the entire housing supply of neighboring Dubai, and add 289,000 hotel
rooms, 6 million square meters of office space, and 5.3 million square meters
of retail space, according to property consultant Knight Frank LLP.
These monumental undertakings will necessitate a revamp of
the Kingdom's contracting industry, with a focus on industrialized construction
and the use of digital and analytical tools to ensure project timeliness.
McKinsey suggests that these new methods could reduce completion times by up to
40%, decrease overall costs, and mitigate project risks.
McKinsey further highlights that Saudi Arabia's plans are of
such magnitude that industrialized construction may become more cost-effective
than traditional in-situ methods. This could position the country as a
construction manufacturing hub for the region and potentially beyond. However,
realizing this vision will not be without its challenges.
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McKinsey's estimates indicate that the white-collar construction
workforce in Saudi Arabia will double compared to 2021 levels by 2025, with an
addition of 150,000 engineering professionals. The construction labor force is
expected to more than triple, incorporating millions of additional workers.
Moreover, the demand for construction materials will strain
the local supply chain, leading to anticipated shortages in 16 out of the top
25 required materials. While efforts are underway to increase capacity through
joint manufacturing and supplier partnerships, creating a local supply chain of
national champions could alleviate shortages and foster collaboration among
various stakeholders.
The report also underscores the importance of early planning
for modularization to make industrialized construction financially and
logistically feasible in Saudi Arabia. Achieving this vision will necessitate a
coordinated effort among owners, regulators, and contractors to establish the
right environment for success.
Source: https://english.alarabiya.net/
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