US $6.7bn in contracts awarded in Saudi Arabia in Q3 says US-Saudi Business Council
The CAI grew by 73.27 points (up 64%) YoY and decreased by 41.88 points (36%) QoQ, the council said
The US-Saudi Business Council (USSBC) has revealed that the total value of awarded contracts across Saudi Arabia for Q3 of 2022 reached US $6.7bn. The council attributed the result to movements in the construction sector driven by Vision 2030 realisation programmes relating to tourism and housing, along with physical infrastructure developments.
The council said that despite a dip in awarded contracts of 6% year-on-year during Q3, the value of awarded contracts thus far is on track to exceed 2021’s performance. Through the first three quarters, the value of awarded contracts surged to $31.9bn, representing a 67% climb over the last year, it explained.
The USSBC Contract Awards Index (CAI) retracted to 188.11 points by the end of Q3; the council said the CAI dipped below 200 points to finish a quarter for the first time since Q3 of 2021. Although the CAI declined, the construction sector continues to operate in an expansionary environment, as it remains well above the 100-point threshold that separates expansion from contraction, stated the report.
The CAI grew by 73.27 points (up 64%) YoY and decreased by 41.88 points (36%) QoQ, the council said. The CAI’s performance during the first three quarters is said to highlight the resurging health of the construction sector, where the value of construction projects under execution continue to soar. As construction activities lag behind the CAI, the value of executed projects witnessed a sizeable rebound after bottoming out in 2020, the report highlighted.
In mid December 2022, Saudi’s NWC said work on $1.1bn of desalination projects had begun.
The gradual decrease in building material costs coupled with growing demand for cement has aided the viability of projects currently in the execution stage, along with developments that are on the short-term horizon. The awarding of mega-projects across sectors will keep construction activity buoyed in the coming years as VRP’s are expected to be delivered, the USSBC noted.
According to the council, the real estate sector rebounded from a soft Q2 with 15 contracts worth $3.3bn being awarded during the third quarter. Mixed-use real estate is said to have led with one contract worth $2bn, while the residential real estate market witnessed eight contracts worth $1.1bn, followed by commercial real estate with four contracts worth $146mn, and hospitality with two contracts worth $145mn.
Overall, the real estate sector is said to have grown by $3.1bn QoQ during Q3 and increased by $1.7bn or 102% YoY. Through the first three quarters of 2022 (YTD), real estate gained the third highest value of awarded contracts by sector with $6.1bn (19%) of the total, after transportation and oil & gas, the report stated.
On a YoY comparison, the real estate sector’s awarded contracts grew by $2.6bn or 73%.
In late December 2022, AMF said that the construction sector was worth $187bn.
Commenting on the transportation sector, the council said it recorded a drop in contract awards during Q3 but the sector remained the second highest performer with a value of $912mn. The 12 contract awards during the quarter were dominated by Neom’s four infrastructure and earthwork packages pertaining to The Line’s highspeed rail link (The Spine).
The transportation sector was found to have declined by $5bn QoQ but advanced by $208mn or 30% YoY. On a YTD basis, the transportation sector attracted $8.7bn in contract awards or 27% of the total, which ranks at the top.
On a YoY comparison, the transportation sector remained well ahead of last year’s pace, as it posted an increase by $2.2bn or 303%.
On water industry contracts, the report said the sector maintained its position as the third highest awarder of contracts from last quarter, hitting $863mn. All four contracts were awarded by SWCC and NWC evenly, and involved the construction of reservoirs, pump stations, water transmission pipelines, and developing sewage networks, the report said.
In early January 2023, SPPC said that it planned to re-tender two IPPs in the Kingdom.
On a year-to-date basis, the water sector saw $3.4bn in awarded contacts or 11% of the total, which ranked as the fourth highest. The water sector increased by $148mn or 5% when compared to the same period in 2021, it concluded.
