The Saudi Arabia construction sector is encountering a significant adjustment, fueled by the all-encompassing growth aspirations of the “Vision 2030” masterplan. There are numerous large & mega projects currently underway, as the Kingdom moves away from a petroleum dominated economy to a more balanced economy.

Saudi Arabia’s Vision 2030 valued anywhere between $500 & $700 billion is still moving forward. However, some major capital projects such as NEOM (new futuristic city) have been reduced in scope in recent months. Saudi Arabia’s construction costs are currently projected to increase by 3.4% to 4.1% in 2025. Saudi Arabia’s General Construction & Infrastructure Construction continues at a brusque pace. Saudi Arabia is currently one of the leading (4) construction markets, together with India China & the USA.

Saudi Arabia has recently announced the plans to construct more than 20 mega capital projects across the country that will significantly transform the country in the next 5 years. Some of these projects include Neom a vast new high-tech city, the Mukaab is a 400-meter-tall office tower that will be the tallest structure in the Middle-East, the King Salman Energy Park, Oxagon a new floating city in the Red Sea, close to the Suez Canal, the new Riyadh Metro, one of the largest public transport capital projects in the world and the new Red Sea International Airport. These major capital projects and the ongoing infrastructure, mining and Oil & Gas construction sectors promises to make Saudi Arabia a very active location for construction in 2025 / 2026 and beyond.

Saudi Arabia is experiencing significant growth, while other Middle East countries are struggling with the fallout of the Israel / Hamas conflict, the kingdom is experiencing an amazing construction boom. Every day we read of new mega projects being planned and breaking ground in most regions of the kingdom.

These vast and bold concepts to construct these mega projects are focused at restructuring the country into a “world class” global economic, commercial and tourist destination. Saudi Arabia’s construction sector is by far the largest in the Middle East. Over the last 5 years, Saudi Arabia’s construction sector has grown by as much as 20%, Saudi Arabia now has the largest Middle East construction market estimated to be in the $175 to $200 billion range per annum.

The new Red Sea resort area will contain more than 40 resort / hotels providing more than 10,000 luxury suites / rooms and more than 2,000 villas and luxury housing units together with supporting amenities. Another similar facility located at Shura Island that contains a number of similar facilities is under construction.

Saudi Arabia recently announced that it is scaling back its NEOM mega city capital project, reducing the population from 1 + million to a more reasonable target of 250,000 by the end of the current decade.

The KSA proposed 170 Km line city has recently been reduced / optimized to 2.5 Km by the end of the current decade, perhaps in retrospect some of these initial plans were overstated.

All the 2025 future projected Middle East construction growth, particularly in the oil / refinery, energy, petro-chemical / industrial and commercial construction is fueled by oil trading above $75 a barrel. Unfortunately, oil is trading below $70 as of this report, which could be problematic.

Dubai continues to be a very active construction market, with numerous infrastructure and commercial projects currently under construction or in the development pipeline.

The falling oil price & demand for oil could turn out to be a problem for some Middle East countries that could benefit future Oil & Gas CAPEX construction projects. However, construction is projected to steadily increase in Qatar, UAE / Dubai, Bahrain and Kuwait over the upcoming years fueled for the most part by oil and gas revenues.

The Israel, Hamas / Hezbollah continuing fighting could be the prelude to a full-blown war in the Middle East, that could see other countries getting involved, such as the USA & Iran. Recently Hezbollah and the Israeli military continue to trade new attacks over the Lebanese border. Israel continues to develop its life sciences, AI & military technology. Unfortunately, the region is still suffering with the ongoing unrest.