Oil rises 1% as petroleum demand set to touch record next year

RIYADH: The construction sector in Saudi Arabia maintained its growth momentum in the third quarter of 2022 with contracts worth SR25.2 billion ($6.7 billion) awarded during the period, according to a report by the US Saudi Business Council.

The report suggested that multiple Vision Realization Programs in the fields of tourism, housing, and infrastructure development drove the sector’s growth in the Kingdom.

Despite a 6 percent year-on-year drop in the number of contracts, the total value is on track to surpass the sector’s 2021 performance.  

The value of awarded contracts in the first three quarters rose 67 percent year on year to reach SR119.7 billion, the report showed.  

“The construction sector continues to perform at a fast pace as a number of supporting developments have aided in its surge,” said Albara’a Alwazir, director of economic research at the USSBC. 

He added: “The improved macroeconomic environment spurred by the Kingdom’s oil revenues coupled with ongoing non-oil sector initiatives have helped propel project awards.”  

The USSBC Contract Awards Index fell from 230 to 188 points in the third quarter for the first time since the third quarter of 2021. Nevertheless, the Kingdom’s construction activity is expected to rise in the coming period since it still lands well above the 100-point threshold. 

“The CAI’s performance during the first three quarters of 2022 reveals the resurging health of the construction sector whereby the value of construction projects under execution continue to soar,” the report said.   

It further noted that the real estate sector grew by SR11.7 billion quarter on quarter and by SR6.3 billion or 102 percent year on year.

“Through the first three quarters of 2022, real estate gained the third highest value of awarded contracts by sector with SR23 billion or 19 percent of the total, after transportation and oil and gas,” it said. 

According to the report, the transportation sector witnessed a drop in awarded contracts during the third quarter yet maintained its position as the second highest-performing sector in the third quarter of 2022.  

The sector fell by SR18.9 billion compared to the previous quarter but increased by SR780 million or 30 percent year on year.  

“The 12 contracts awarded during the quarter were dominated by NEOM’s four infrastructure and earthwork packages pertaining to The Line’s high-speed rail link called The Spine,” the report added.  

The water sector fell by SR3.3 billion or 51 percent year-on-year and by SR2.9 billion or 47 percent quarter-on-quarter.   

The report pointed out that the Tabuk region captured the largest share of awarded contracts worth SR10.2 billion or 42 percent of the total, driven by the real estate sector.

According to the report, the Riyadh region witnessed a diversified mix of awarded contracts in the civil, transportation, real estate, and healthcare sectors.  

The Eastern Province contributed SR3.7 billion or 15 percent of the total contracts awarded in the Kingdom, largely backed by the oil and gas sector.