Saudi Arabia is pouring billions of dollars into mega projects, massive tourism, and infrastructure developments to diversify its economy away from oil.
Since 2016, the kingdom has awarded $250 billion in construction contracts and is launching a new airline and airport. According to Knight Frank, it also plans to build 660,000 homes, 289,000 hotel rooms, 6 million square meters of office space, and 5.3 million square meters of retail space.
The kingdom’s investment spree shows no signs of slowing down. A recent report by McKinsey & Co. indicates that Saudi Arabia is set to invest more than $175 billion annually on industrial and mega projects between 2025 and 2028. Spending is projected to peak at $180 billion in 2026 and 2027.
The report, which Bloomberg cited, estimates that $1.3 trillion worth of projects are underway in Saudi Arabia, including the $500 billion NEOM and Red Sea resorts.
The expected annual contract awards are set to triple the historical average, growing from $50 billion to $150 billion.
Innovative methods such as industrialized construction and digital and analytical tools will likely reduce completion time by almost 40%, lower overall costs, and mitigate project risks.
McKinsey expects the white-collar construction workforce in Saudi Arabia to double from 2021 levels before 2025, adding 150,000 engineering professionals. Construction labor is anticipated to more than triple, adding millions of additional workers.
Achieving that vision won’t be easy, said the report. “For industrialized construction to be financially and logistically feasible in KSA, the entire construction ecosystem of owners, regulators, and contractors would need to come together to set up the right environment,” explained Mckinsey.
“The resources needed to fulfill the new construction ambitions of the Kingdom of Saudi Arabia over the next decade are colossal,” Bloomberg explained, citing the report.
The report’s findings suggest that Saudi Arabia is poised for a major construction boom in the coming years.
The kingdom is investing heavily in infrastructure and tourism projects, and the influx of foreign investment is expected to create millions of new jobs.
