In 2017, the outlook for growth in the Saudi Arabian construction sector is predicted to remain poor.
The government’s realignment of the project pipeline and effort to improve efficiency in project delivery through the introduction project management offices slows project progress, said a report by Report Buyer.
According to the report, Saudi Arabia Infrastructure Report Q1 2017, stated that Vision 2030 will be key to opening up the infrastructure market, with the potential of private investment in transport sectors to energise the sector.
“We forecast overall construction growth of 1.9% y-o-y for 2017. This will be an acceleration on 2016 as the industry recovers from the government failing to pay contractors and benefits from slightly improved liquidity and more efficient project implementation,” it said.
From the demand side for the construction sector, we expect a continued lull of large-scale investment plans in the short term as concerns over the economy remain, added the report.
In September 2016, the government enacted wide-ranging fiscal reforms, which pared subsidies and salaries in a variety of sectors.
“The announcement of the Vision 2030 and associated National Transformation Plan (NTP) confirmed a number of our previously highlighted long-term themes for the Saudi Arabian construction market namely infrastructure is at the centre of realising diversification plans, and private sector participation will become increasingly common,” the report claimed.
The report further said that Saudi Arabia’s Infrastructure RRI score has fallen this quarter to 66.0 out of 100, although this still means the market scores well above the regional average of 54.5 for the Middle East and Africa (MENA) region.
Saudi Arabia has the largest construction market in the GCC and scores highly for the amount of investment made in the economy. The labour market is the biggest risk in the construction sector.
The country’s dependence on oil exports and its intervention in Yemen has exposed the country to growing risks, lowering scores in this section of the responsible research and innovation (RRI), the reported stated.
Source: Construction Week Online