Infrastructure

‘Low return on built assets in Saudi Arabia will correct by 2022’

By Anoop Menon

Posted on September 19, 2014

Saudi Arabia was ranked 29th in ARCADIS’ study into returns on built assets in 30 countries

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According to an ARCADIS study, the return on built assets (buildings) in Saudi Arabia as a proportion of GDP, among the lowest among major economies.

“Saudi Arabia’s return on built assets is relatively low,” said Hisham Al Malaika, head of property and social infrastructure in Saudi Arabia for Arcadis. “We also have a huge issue with the quality of the infrastructure we are building (in the Kingdom).” Al Malaikia made these observations while addressing the annual MEED Saudi Mega Transport & Infrastructure Conference, held in the capital Riyadh from September 15-17, 2014.

Aracadis has completed a study into returns on built assets on a total of 30 countries, including Qatar, Saudi Arabia and the UAE.

“The UAE was ranked seventh among the 30 countries in terms of return on built assets as a proportion of GDP while Saudi Arabia ranked 29th,” said Al Malaika. He noted that the return on built assets in the Kingdom should rise sharply in the years to 2022. However, this would require greater attention to planning, procurement, operations and maintenance and replacement and renewal of built assets.

Meanwhile, international construction companies have been advised to choose their projects in Saudi Arabia carefully to avoid the manpower and materials shortages that are currently blighting many schemes across the Kingdom.

According to MEED Insight, Saudi Arabia is set to remain the Middle East’s largest projects market for the foreseeable future as the Kingdom focuses on job creation and the diversification of its economy. In 2014, it is forecasted to award $55bn worth of contracts, comfortably ahead of the UAE, the region’s second largest market.