As per the recent reports, the construction industry in “Saudi Arabia” is currently leading in the entire Middle East region. The total cost of the current ongoing projects in the entire Middle East region is approximately 7.1 trillion Saudi riyals and nearly one-quarter of these projects are being executed in the Kingdom of Saudi Arabia. A range of geographic, demographic as well economic factors along with the persistent support of the government have assisted the country to initiate several infrastructure developments. The current economic down turn of Saudi Arabia had also assisted the country to become construction leaders in the market. As indicated by the construction personnel, 34 contracts in the first months of 2009 each approximating to nearly 500 million dollars were initiated. In the prospect years, the government of Saudi Arabia is intending to fuel its construction sector growth at a faster rate. The officials of the Saudi Government reported that over the next five years, the government will spend approximately 400 billion dollars on large infrastructures. The Saudi government had spent approximately 137 billion between October 2008 and April 2009 on the construction projects. However, more than twice of these projects approximating up to 62 billion dollars have been delayed during the same period. In June 2009, according to the Trade Arabia News Service nearly 4% of the construction projects costing nearly 543 billion dollars have been either delayed or canceled among which 25 were delayed and 30 were canceled.
At present, nearly 460 projects costing up to 289 billion dollars are in the construction phase. On the other hand, among the remaining projects most of them are in bidding, designing or planning phase. There is a great potential for growth of the construction sector in the view of the fact that the demand is increasing for the institutional, housing, commercial and residential construction. Exclusively, significant growth is expected in the residential sector due to the fact that the population of Saudi Arabia is increasing at a rate of 2.5% annually. The budget of the Saudi government mirrors the significance of the continuous development of the construction industry and this spending is probably to remain extensive since there is a decrease in the costs of the commodities because of economic recession worldwide. Moreover, in the viewpoint of the construction personnel there is a higher propensity of the revival of the construction industry in specific as well as in the economy of Saudi Arabia on whole as the financial environment enhances and the demand of the construction projects continues.
Construction Industry Of Saudi Arabia
Over the decades, the construction industry of Saudi Arabia has undergone through various phases. The first stage introduced a five year development plan and it was initiated in the year 1970. During this phase, the actual significance of the construction was acknowledged and it was considered equally important as the petroleum industry for the economic growth. The citizens of Saudi Arabia during this stage were encouraged through interest-free loans and government grants to construct and invest in several projects of distinctive function, sizes, and types. Unfortunately, the majority of these projects were inadequately handled. In fact, in the start of the fourth year of the five-year plan, financial support for the infrastructure projects significantly decreased. A range of factors contributed to this decline such as the discovery of several defects in the constructed buildings, scarcity of high investment and profit risk and increased competition.