Arab News, Mon, Jun 10, 2024 | Dhu al-Hijjah 4, 1445
Saudi Arabia leads global construction activity with $1.5tn pipeline: JLL report
Saudi Arabia:
Saudi Arabia led global construction activity in the first quarter, with a $1.5
trillion pipeline of unawarded projects, according to data analyzed by JLL.
The latest report by the real estate services
company reveals that the Kingdom accounted for a 39 percent share of the total
construction projects in the Middle East and North Africa region, valued at $3.9
trillion.
Within the Kingdom’s pipeline, the construction
assets sector represented 62 percent or $950 billion of the overall projects,
while transportation, infrastructure, and other utilities accounted for 38
percent or $582 billion, as noted by JLL citing insights gathered from MEED
Projects.
Laura Morgan, market intelligence lead, Middle
East and Africa at JLL, said: “Economic growth, burgeoning population, and
modernization have made Saudi Arabia the most active player in the Middle East
construction market, with the real estate sector leading the Kingdom’s projects
market in 2023.”
She added: “The impressive resilience of the
sector in the face of global uncertainties points to the success of the
Kingdom’s economic diversification strategies.”
JLL report mentioned that the country is set for a
potential 2.1 percent gross domestic product growth in 2024 and 5.9 percent in
2025.
It added that Saudi Arabia's progress on numerous
Vision 2030 giga-projects and infrastructure developments ahead of the upcoming
EXPO 2030 has “cemented the Kingdom’s position as a leader in construction
activity regionally and globally.”
In the report, JLL also maintained a positive
outlook for Saudi Arabia despite challenges including inflation, elevated
interest rates and geopolitical tensions.
Referring to MEED Projects data, it noted that the
Kingdom’s construction sector saw the highest value of awarded projects in 2023,
totaling $97 billion, up from $60 billion in 2022.
Morgan emphasized that as market dynamics
continuously evolve, the impact of construction costs on the sector's robust
growth cannot be ruled out.
She added that other market constraints, such as a
shortage of skilled labor, resource availability, and an overheating market,
could place undue pressure on the Kingdom's construction activity.
Citing the recent Purchasing Managers’ Index
released by Riyad Bank in association with S&P Global, JLL observed that
companies operating in the construction sector tried to reduce workforce hiring
in the first quarter to manage costs and cash flow.
Moreover, the report noted that the lingering
shortage of skilled professionals and general labor to keep up with the pace of
construction poses a significant risk in Saudi Arabia.
“Despite recent disruptions and supply challenges,
JLL’s analysis reveals stable material availability in the first quarter,” said
the real estate consultancy.
It added: “Although there is still significant
reliance on imported materials like glazing, facade systems, and timber in the
local and regional markets, the medium- to long-term outlook indicates
improvements in local manufacturing capabilities, stemming from demand generated
by major projects in Saudi Arabia.”