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Image used for illustrative purpose. Foreign workers work at a construction site, following the outbreak of the coronavirus disease (COVID-19), in Riyadh, Saudi Arabia, May 7, 2020.
The acceleration of mega and giga projects in Saudi Arabia will likely aid in the recovery of the Kingdom’s construction industry, Al Rajhi Capital said in a new report.
The brokerage expects a boost to the construction sector based on the government budget figures.
“The government’s 2023 budgeted revenues are likely based on Brent of $78 per barrel, which is likely to aid in strong government spending,” it said.
The construction sector has shown signs of recovery in the third quarter of 2022, with local cement sales volumes increasing by 5.4 percent year-on-year between July and November 2022.
“Consistent offtake of new residential loans, along with the softening of construction material prices, has aided the recovery of the construction sector in the Kingdom,” Al Rajhi Capital said.
Moreover, the Kingdom continued to record strong growth in residential mortgages, with the new deals averaging 10.7 billion Saudi riyals ($2.84 billion) per month for the period January-October 2022.
“Going forward, we expect the strong offtake in mortgages to continue, as we expect the new mortgage to average SAR 7 billion ($1.9 billion) per month in 2023,” the report noted.
The overall residential mortgage is likely to grow at a CAGR of 12 percent between 2022 and 2024, it added.
(Writing by D Madhura; Editing by Anoop Menon)
