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Saudi Arabia’s structural production expansion is expected to increase to 3. 2% in 2022, with a new average annual expansion rate (AAGR) of 4% between 2023 and 2026, as reported via Global Data.
The structures industry in Saudi Arabia continues to dominate the MENA region despite macroeconomic situations affecting the sector globally, according to JLL’s KSA Construction Market Intelligence Report for the fourth quarter of 2022. its commitment to driving economic diversification and transforming the country in line with its Vision 2030.
Construction production expansion in Saudi Arabia is expected to increase to 3. 2% in 2022, with a new average annual expansion rate (AAGR) of 4% between 2023 and 2026, as reported via Global Data.
Saudi Arabia has maintained its most powerful market position in the MENA region, with the total price of allotment awards for 4 consecutive years. As of October 2022, Saudi Arabia had a 35% market share with a contract award price of $31 billion compared to a total of $87 billion in the MENA region, as tracked through MEED Projects.
The price of the Saudi portfolio of unawarded (pre-execution) projects is estimated at $1. 1 trillion, which includes projects from the examination level to the main contractor’s offer. , the recreation and hospitality subsectors as leaders, which is the driving force behind the Vision 2030 strategy. In the current part of 2022, 13,000 hotel keys are expected to be handed over in Riyadh, Jeddah and Makkah, accentuating the further progression of the kingdom’s hotel sector.
The kingdom’s ten most sensible vendors are guilty of $400 billion in projects that are lately in the execution phase, accounting for 40% of the total long-term price of the $1100 million portfolio. According to MEED Projects, the total price of projects awarded in Saudi Arabia between 2021 and 2025 will succeed at $569 billion, with a total of $85 billion (15%) awarded to date between 2021 and 2022 (end of October).
JLL’s market intelligence data further revealed that global economic volatility in the first two quarters of 2022 created demanding conditions in the locally structured market in terms of lead times and instant price increases, with suppliers reluctant to guarantee prices for long periods of time.
In addition, it also indicated news from the second to the third quarter of 2022, which implies that the value peaks have passed; However, increases in value remain a significant threat due to the correlation with economic points and trends observed since 2020.
In addition, the report highlights that long-term structural costs will need to be weighed against the local market and global economic factors. Although commodity costs are falling or have already stabilized, the kingdom’s structural sector is warming, putting pressure on the existing supply chain. and highlighting the need for a larger festival to complete the project portfolio.
While inflation projections for the country are low compared to global averages, Saudi Arabia, as well as the MENA region in general, boasts imports of construction fabrics from countries with the highest inflation, affecting construction curtain prices.
“Given volatile market situations and emerging construction prices, which reached a significant peak in the current quarter of 2022, there is a need for physically powerful mitigation strategies, adding prudent technique for contract execution and threat assignment,” Morgan said. guilty of MEA marketplace information. at JLL.
From a structure rate perspective, JLL estimates that supply-side value (IPT) inflation rises through an average annual replacement percentage of 5% in 2022. This recovery is representative of market points such as growing demand for contractors and labor, commodity values, and building materials. . fluctuation.
Looking ahead, JLL’s average TPI forecast represents a forward-on-year expansion of 6% in 2023, along with the estimated allocation pipeline price correlated with long-term demand, based on its cumulative data from market sources.
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