Saudi Arabia: Saudi Arabia’s construction sector saw significant growth in 2024, with 3,800 new licenses added in just one year to bring the total to 8,900, according to a top official. 

During a panel discussion at the Public Investment Fund Private Sector Forum in Riyadh, Fahad Al-Hashem, assistant deputy minister at the Ministry of Investment, stated that the surge reflects increasing foreign investment and regulatory reforms aimed at streamlining market entry. 

His comments came as figures released by the Ministry of Investment showed a 59 percent annual increase in licenses for construction activity in the fourth quarter of 2024 alone.

The data also showed that 14,303 permits were awarded across the entire economy last year, excluding those related to the anti-concealment law. 

“In the number of licenses, we had 8,900 construction companies licensed in the Kingdom, last year alone we had 3,800 companies licensed in the Kingdom,” Al-Hashem stated.

The deputy minister highlighted the broader impact of these reforms, noting that real estate developers also saw a rise in licenses — adding 244 in 2024 to the 446 already issued. 

 “This is just to showcase the uptake from foreign investors into the market, and we hope to see an increase with these upcoming reforms,” he said. 

Al-Hashem emphasized the Kingdom’s efforts to enhance its regulatory framework, with 800 improvements identified since the launch of Vision 2030, 80 percent of which have already been implemented. 

One major shift was the replacement of the licensing regime with a registration system to simplify market entry. 

“We are working continuously with our colleagues across the government to really reduce the timeframe from being really interested to entering the market to being fully operational,” he added. 

Addressing cost challenges in the sector, Al-Hashem pointed to initiatives such as the establishment of an international contractor office within the ministry. 

“We collaborate with stakeholders to streamline such service-wide journey into the market, to ensure ample supply comes into the market, in order to also add competition and ensure that project owners and investors have good returns with their capital,” he said. 

He underscored the government’s commitment to fostering a dynamic and competitive market, stating: “I can go on and on and on about many examples that we’re seeking to liberate, add supply into the market, and constantly develop value chains to ensure that the Kingdom, as it has high ambitions, has the most conducive, the most dynamic, and most competitive market out there.” 

Saud Al-Sulaimani, country head of Saudi Arabia at JLL, highlighted the dual nature of the Kingdom’s construction boom. 

“What makes the Saudi market interesting is that there are two things happening at the same time: the redevelopment of projects as well as the development of new cities and projects,” he said.

Construction leading the way

The figures from the Ministry of Investment showed that 1,358 licenses were issued to the construction sector in the fourth quarter of 2024 – making it the leading recipient of such permits.

Manufacturing ranked second with 676 licenses, representing a 39 percent annual increase during the quarter. 

Wholesale and retail trade followed with 527 licenses, posting a188 percent surge. Together, these three sectors accounted for 55.7 percent of total approvals. 

The ministry’s data also showed that accommodation and food services, along with the information and communication sector, each received 390 approvals, collectively making up 17 percent of total licenses. 

Professional, scientific, and technical activities secured 364 licenses, accounting for an 8 percent share. 

The Kingdom’s cumulative Gross Fixed Capital Formation and foreign direct investment exceeded targets for 2021–2024, with GFCF reaching SR3.83 trillion by the third quarter of 2024 — 19 percent above the SR3.22 trillion goal, according to the ministry. 

Likewise, cumulative FDI inflows totaled SR391 billion including the Aramco deal, exceeding the SR295 billion target by 33 percent. 

These achievements highlight the Kingdom’s success in fostering a dynamic investment climate, driven by regulatory reforms, enhanced investor confidence, and key initiatives under Vision 2030, which aims to position Saudi Arabia as a premier global investment hub.

Saudi Arabia also ranked first in the Middle East and North Africa region for total venture investment and topped global rankings for ease of starting a business, according to the ministry’s report. 

Regional HQ program continues to thrive

The Ministry of Investment continued its efforts to enhance the business environment, issuing 46 new licenses for regional headquarters, further solidifying the Kingdom’s position as a hub for multinational corporations. 

The regional headquarters program, a key component of this strategy, incentivizes multinational firms to establish their bases in Saudi Arabia by offering regulatory advantages, tax benefits, and streamlined business operations.