Will Saudi Arabia be the Next Big Thing in Construction?

At a time when the UAE isn’t absorbing UK quantity surveyors and construction expatriates at a rate we would like; it is plain to see why the projects within Saudi position it as poised for huge expansion and growth. With so much planned investment; reported to be in the region of £400 billion, coupled the development that is already underway the opportunities within the Kingdom certainly appear to be abundant. In this article Maxim Recruitment reviews the projects that have been recently reported and evaluates the potential opportunities for UK expatriates for construction jobs and British companies to win work in Saudi Arabia.

Saudi Arabia Construction Overview

The scale of the projects matches the geographical size of the country. It covers the same area as Western Europe. Fuelled by oil and an ambitious King Abdullah, The Kingdom is poised for growth during 2009. The country has extensive oil and gas extraction projects but is also making a substantial effort to diversify the economy away from dependence on oil and gas. The King of Saudi Arabia is determined to position Saudi as a major international player, in science and technology as well as in the development of the region.

Saudi Arabia has successfully positioned itself as the ‘powerhouse’ of the gulf in a weakening global economy. The Kingdom accounts for 25% of the Arab World’s GDP and is the UK’s largest trading partner in the Middle East and its second largest export market in the region. One of the main drivers of the economy is the size and speed of growth of the population. It is estimated that over 45% of the Saudi population is under 20 with a strong desire to live in an urban environment. Thirty years ago there was a significant migration from rural areas towards Jeddah, Dammam and Riyadh and this desire for the urban life has continued to present day which has increased demand for quality infrastructure and housing.

Saudi Arabia’s Economic Cities to be built
Mega projects that are already underway include four ‘Economic Cities’; King Abdullah Economic City (KAEC), Jazan Economic City, Knowledge Economic City in Medina and Prince Abdul Aziz Bin Mousaed Economic City in Hail. The most advanced and largest of these is King Abdullah Economic City which itself is subdivided into six components including and Industrial Zone, Residential Areas and a Central Business district. To give an idea of scale; it covers 172 km square, approximately the size of Hong Kong. It will provide accommodation for a population of up to one million.

Housing
It is reported that the population of Saudi is growing by 500,000 per year. Major real estate projects are underway an example of which is Jeddah Hills in Jeddah which will consist of 20,000 top range residential units.

Transport
Plans for the £34bn of construction investment on transport are on the same magnitude including roads, railways and ports. Fifty percent of this is designated to rail schemes including the Saudi Landbridge that will link Jeddah and Riyadh via 950km of new rail line and the Mecca to Medina high speed link. Both of these projects are at the bidding stage and the Landbridge project is being re-tendered due to the current economic climate. Another link between these two cites is a monorail designed to transport pilgrims around the holy sites.
For the roads, £3.5 billion is being invested in major upgrades of the networks in the Kingdom’s largest cities. This will largely take the form of expanding the dual lane roads to four lanes. Upgrading the infrastructure surrounding its sea terminals to boost trading is a priority. The largest port is one of the components of King Abdullah’s Economic City, it will be the 10th largest seaport in the world and will be the largest near the Red Sea.

Airports
Contracts have recently been awarded to manage and develop The Kingdoms three International Airports. In Jeddah King Abdul Aziz International Airport can currently handle 15 million passengers per year. Once expanded this figure will increase to 80 million. This relates to the planned £36 bn that is due to be spent on tourism. Both the Saudi Arabia economy and their local construction market is uniquely positioned to benefit from the forecast growth (according to Jones Lang LaSalle) in religious tourism in coming years.
Areas of development for potential tourist destinations are the regions of Asir, Mecca, Riyadh, Jizan and Narjan. It is recognised that investment from tourism will have positive consequences on the whole area.

The scarcity of water in the Kingdom is being addressed with a privatisation programme that is underway and being led by the National Water Company. Within the next eight years public-private partnerships will cover the major cities within the Kingdom. Contracts for upgrading and maintaining the network will be in place alongside these. These offer great potential for British construction expertise to be utilised in the region.

Saudi’s Construction Growth and Development
The growth and development of Saudi Arabia is different from that which was seen in other areas of the Gulf. The expansion appears to be more considered and measured as plans for infrastructure are developed alongside those for housing power and education. Foreign expertise is required to maintain the scale and pace of development within Saudi Arabia. The complexities of establishing home or a construction business in Saudi Arabia should not be underestimated and Maxim can help explain and discuss the differences versus other areas in the Gulf. One benefit of taking a quantity surveying or project management job in Saudi is that Saudi employers are expected to provide housing, transport and medical cover for expatriate staff and most will live within a compound with excellent luxury facilities.

Conclusion
Maxim Recruitment is excited about the prospects in Saudi Arabia and is taking part in a trade mission during April 2009. If you are interested in the opportunities in Saudi Arabia or have any experience or feedback on the region to share with us then please do get in touch.

In our next newsletter we will provide an update on specific regional opportunities and prospects for British expatriates and Companies and live vacancies will be added to our website as they become available.