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CAIRO: The value of construction contracts awarded in Saudi Arabia reached SR46 billion ($12.3 billion) in the first quarter of 2022, signaling a robust start to the year, according to a US Saudi Business Council index which tracks spending in the sector.

The USSBC Contract Awards Index grew to 212.31 points in the first three months of the year, meaning the Kingdom’s construction activity is expected to rise in the coming period. 

Saudi Arabia bounced back strongly after the sharp drop of 2020, when the value of awarded contracts had plummeted to SR80 billion.

It was then revived to SR142 billion in 2021, and has been accelerating since. 

According to the report, this quarter’s CAI data indicated four months above 200 points, and 12 whole months above the 100 point threshold.

Between 2021 and 2022, the CAI saw a 130 percent rise year on year, signaling a 120 point increase in that period.

The Kingdom was able to foster that growth due to a resilient oil market, a growing number of capital developments, and the implementation of an array of distinct strategies.

“The growth of the Kingdom’s economy, which witnessed sizeable increases to GDP (gross domestic product) due to global oil market dynamics and steady strengthening of its non-oil GDP, will keep the construction sector active” said Albara’a Alwazir, director of economic research at the US-Saudi Business Council.

The leading sector in awarded contracts yet again was oil and gas, totaling SR15.1 billion worth of contracts in the first quarter of this year, accounting for a third of the aggregate amount.

In 2021, the oil and gas sector was also in the lead closing the year at SR43.5 billion, whereas the year-on-year rise was by 290 percent standing at SR11.2 billion.

In addition, real estate witnessed a 20 percent quarterly increase, and a 126 percent yearly increase in the first four months of this year.

Mixed-use market, which dominated 42 percent of all real estate, accounted for SR4 billion in Q1 2022. Commercial real estate totaled SR3.2 billion, or 34 percent of aggregate real estate, residential real estate totaled SR1.4 billion, or 14 percent, whereas hospitality accounted for SR990 million, or 10 percent.

In the power sector, the growth stood at SR1.7 billion, or 33 percent year-on-year in 2022; however, it decreased by SR5.4 billion, or 43 percent compared to the fourth quarter of this year.

According to the Business Council report, Saudi Arabia’s construction activity saw a strong start in 2022, and is expected to advance further during the rest of the year.

“A pickup in capital expenditure is anticipated for the remainder of 2022, as numerous state social and physical infrastructure projects that were earmarked in the budget will commence.” stated the report.