KSA construction industry sees solid growth in Q3 2019, USSABC report finds

Kingdom sees $12.7bn worth of awarded contracts, with oil and gas leading all other sectors

Saudi Arabia’s construction industry has witnessed solid growth in the third quarter of 2019, buoyed by $12.7bn worth of awarded contracts, a report from the US-Saudi Arabian Business Council (USSABC), has found.

The awarded contracts during Q3 2019 continued the trend seen thus far this year, with the oil and gas sector leading all other sectors, followed by the real estate sector. However, this quarter witnessed the industrial sector amass the third highest value of awarded contracts after a relatively slow pace during the two previous quarters.

The three sectors accounted for 80% of all contract awards during the quarter, the report added. Other notable contributing sectors included urban development, water, and transportation, it added.

As construction activities continue at an accelerated rate thus far in 2019, USSABC said that the value of awarded contracts is on track to cross the $53.3 billion mark for the year for the first time since 2015. Further bolstering this notion is the y-o-y growth of contract awards during Q3 2019, which increased by 164% compared to the previous year.

In addition, the first three quarters of 2019 saw a major increase of $23.3 billion or 117% compared to the same period in 2018. In the Q2 2019 edition of the USSABC report – the value of awarded contracts thus far in 2019 has surpassed all that of 2018, further increasing during Q3 2019 by a total of $12.6 billion or 60%.

The USSABC Contract Awards Index (CAI) reached 236 points at the end of the third quarter. The CAI remained above the 200-point mark for the fourth consecutive month as the ramp up in awarded contracts during Q1’19 and continued momentum during Q2 and Q3 elevated the CAI into a very healthy environment.

The CAI marginally dipped compared to the previous quarter’s 240.44 points. However, the CAI grew by an impressive 111% y-o-y compared to Q3’18.

The CAI gradually decreased during Q3’19 as it reached 245.67 points in July, 242.21 points in August, and 236 points in September.

According to USSABC, the value of awarded contracts for the year continued to be dominated by the oil and gas sector.

The energy industry accounted for $4.4 billion or 34 % of the total value of awarded contracts. On a YTD (year-to-date) basis, the oil and gas sector has witnessed $20.4 billion or 47% of all awarded contracts by value.

The real estate sector garnered $3.2 billion or 25% of the total value of awarded contracts. Within the real estate sector, the mixed-use subsector generated the highest value of contracts with $2.0 billion, followed by residential with $1.1 billion and commercial with $130 million.

Lastly, the industrial sector had $2.6 billion or 20% worth of awarded contracts. The largest contract by value in the industrial sector pertained to the construction of a tyre manufacturing facility in the Eastern Province for the National Tire Company, it added.


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