KSA construction falls 30% as prices rise

Shortage of manpower and increased building material prices blamed for slowdown

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RELATED ARTICLES: Saudi offers projects worth $1 trillion to American investors | Saudi construction officials back FIDIC contracts | Rising costs threaten Saudi real-estate market Saudi contractors said construction work has dropped 30% this year as compared to last year’s figures due to a rise in the prices of building material and shortage of manpower. They suggested the sector is facing a crisis due to labor shortage and increased prices of construction provisions. The sector is experiencing an unprecedented state of recession, which stands at 30% compared to last year’s registered 20%, said Abdel Aziz Al-Hanafi, former chairman of the Contractors Committee at the Jeddah Chamber of Commerce and Industry (JCCI). He further explained the residential construction sector continues to be under the grip of recession despite the government having commissioned mega projects, and stated the absence of statistics on the need of the market as a major gap facing the contractors. “There are no clear-cut estimates of the number of housing units the market needs, not even the volume of material needed to implement projects”, he said, in an Arab News report. Abdullah Al-Maglouth, member of the National Committee for Contractors said a large number of contractors are unqualified and most of them are foreigners. “With the new labor laws, expatriate contractors have become reluctant to work in this sector”, he said. He further suggested the legalisation period carried out by the Ministry of Labor has stunted the development of the construction market. The Committee of Contractors at the Council of Saudi Chambers of Commerce and Industry recently released a study that found there were nearly 200,000 Saudi workers in the construction sector. The growth rate in the contracting sector reached 16.5 percent in 2012 and its share of the gross domestic product (GDP) stood at 4.6 percent.

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