New Construction market report from Business Monitor International: "Saudi Arabia Infrastructure Report Q3 2013"
Boston, MA -- (SBWIRE) -- 07/18/2013 -- Saudi Arabia's construction sector is experiencing a boom period driven by all sectors of the infrastructure and non-residential building industries. Over the near term we have revised up our growth outlook for the construction sector, driven by continued strong activity anticipated in the energy sector. We also expect a pick-up in investment into residential construction, as the mortgage law moves closer to approval and commitment is reiterated to the SAR250bn housing plan through policies to enable the release of land. Risks remain in terms of costs, labour shortages and public institutional inertia which threaten to delay the project pipeline.
We have upgraded our outlook for construction industry growth over the near term based on the strength of construction contract awards, and revised historic data showing a stronger growth trend than previously. We are now anticipating 10.4% and 9.4% real growth in construction industry value in 2013 and 2014 respectively.
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Factors Underpinning Growth:
- Transport Upgrade: The transport sector is receiving preferential treatment, especially rail infrastructure, with projects worth US$24bn under way or in the pipeline. To support this flurry of transport contracts and to ease layers of red tape, the government set up a Public Transport Commission in October 2012.
- Strong Chemical Integration: A growing number of petrochemicals projects are also boosting construction activity, as the country attempts to diversify its industrial sector away from oil and gas. In fact, we are seeing a rapid expansion of downstream capacity to meet the growing economic needs of the region, with operators rushing to capture an increasing slice of the market.
- Electricity Revamp: Another dynamic sub-sector in Saudi Arabia continues to be power plants and transmission and distribution (T&D). The US$80bn (excluding nuclear), 10-year investment plan for electricity infrastructure (2008-2018) has led to significant activity in the energy sector.
- Generous Social Spending: Huge investment into the social infrastructure sector is likewise in the pipeline, in part to appease the populace. Both the SAR1.44trn (US$385bn) Ninth Development Plan (2010-2014), and social benefit packages worth a total of US$130bn - the latter announced in response to the protests which swept the region during 2011 - are heavy on social infrastructure spending.
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