Driven by investments in transport infrastructure including airport development projects, the construction industry in Saudi Arabia is projected to grow at a compound annual growth rate (CAGR) of 7.05% from 2016 to 2020, according to a report by Timetric.
Titled ‘Construction in Saudi Arabia – Key Trends and Opportunities to 2020‘, the report highlights how the government’s decision to expand and modernise the county’s airport sector will act as a catalyst to increase the growth in the construction industry.
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Saudi Arabia’s General Authority for Civil Aviation (GACA) has announced plans to invest in the development of airport infrastructure to handle the growing passenger influx, which is expected to reach 100m annually year by 2020. The expansion of the domestic tourism industry is also dependent on the planned improvements in the aviation sector.
The construction industry will benefit from the authorities’ plan to develop and improve 27 domestic, regional and international airports under the Vision 2020 programme to increase their passenger-handling capacity. The report also notes that, in November 2015, the GACA decided privatise the country’s airports by 2020 to offset the budgetary deficit incurred due to declining oil prices.
Other sectors including healthcare, manufacturing, education, energy and housing are also expected to contribute towards the promising outlook of the country’s construction industry. Several initiatives announced by the authorities in these sectors, including the White Land Tax initiative, are expected to further boost the construction industry.
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Meanwhile, the Arriyadh Development Authority (ADA) is working to modernise the traffic infrastructure in the country’s capital city. This is being done with an aim to reduce traffic congestion and to equip the transport infrastructure to deal with the demands of a growing population.
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By GlobalDataHowever, the Timetric report cautions against low oil prices, stagnant economy, a huge budget deficit and the military intercession in Yemen that could slow down the construction sector and adversely affect its growth prospects.
