Saudi Arabia’s ailing construction sector could see a raft of new contracts over the next two years as government efforts to bring more private sector investment into play begin to bear fruit, according to a new report.
Privatisation and alternative financing models are being rolled out across the kingdom and the benefits are likely to be felt by early adopters across a number of sectors, including health, education and housing amongst others, said Faithful+Gould in its Q3 KSA Construction Intelligence Report.
“Regionally and internationally, finance institutions are seemingly keen on engaging in these models, and we should expect to see a significant raft of deals through the coming 24 months as the Kingdom continues to reprioritise socially important schemes and those which enable economic diversification,” said the report authored by David Clifton and Donal O’Leary.
Contract awards have tailed off over the course of 2017, with Q1 offering $11bn but total year to date coming in at just under $18bn. It is unlikely, unless major schemes move forward swiftly, that estimates for the year will be achieved, the report said. However the outlook for 2018 is much better.
“Looking forward to 2018 we’ve seen alternative financing arrangements engaged in the kingdom and there is appetite for a variety of schemes that consortia are pricing now,” the report said.
“The reprioritisation of schemes in the government pipeline has taken longer than expected although it seems this process (whilst continually ongoing) is starting to have an impact.”