Saudi Focus

Contract awards top $23bn in second quarter

October 2014

THERE was a significant upswing in the value of awarded contracts in Saudi Arabia during the second quarter of 2014, topping SR84.9 billion ($22.63 billion), the National Commercial Bank (NCB) said in a report.

Upcoming contracts were expected to include numerous mega projects within the anchor sectors, said the “NCB Construction Contracts Index” report – the bank’s latest quarterly review of contract awards in the Saudi construction sector.

One significant project that is expected to be awarded is the terminal upgrades at King Khalid International Airport. Additionally, Saudi Aramco is receiving bids for its SR11-billion ($2.93 billion) Khurais oil field expansion in the Eastern Province.

Anchor sectors took hold of the majority of spending, as the power and oil and gas sectors accounted for approximately 60 per cent of the value of awarded contracts. Those two sectors have also dominated the value of awarded contracts during the first half of 2014, accounting for 49 per cent of contracts.

The roads sector came third, with nine per cent of the value of awarded contracts during H1’14. It had approximately SR1.1 billion ($293 million) in awarded contracts.

The Q2’14 value of awarded contracts surpassed Q2’13 by 60 per cent, when it reached SR53.6 billion ($14.29 billion). Furthermore, the value of contracts during H1’14 surpassed that of H1’13 by 21 per cent, which stood at SR102.7 billion ($27.38 billion).

The concentration of contracts within the oil and gas sector in the Jizan region allowed it to capture 33 per cent or SR19.6 billion ($5.22 billion) of the overall share by region. The residential real estate sector had three contracts worth SR1.5 billion ($400 million). Within the education sector, approximately SR1.4 billion ($373 million) worth of contracts were awarded.

The report said the construction market relies heavily on key market determinants such as demographic dynamics, labour size and the health of the kingdom’s industries.

These factors continue to propel the growth of the construction sector as demand for social and physical infrastructure have and will continue to be a focal point, it noted.

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