Saudi Arabia's construction industry witnessed solid growth in the third quarter, buoyed by SR47.8 billion ($12.7 billion) worth of awarded contracts, according to a report by the US-Saudi Arabian Business Council (USSABC).
These awarded contracts during Q3’19 continued the trend seen thus far in 2019 as the oil and gas sector led all other sectors followed by the real estate sector. This quarter, however, witnessed the industrial sector amass the third highest value of awarded contracts after a relatively slow place during the two previous quarters.
These three sectors accounted for 80 per cent of all contract awards during the quarter. Other notable contributing sectors include urban development, water, and transportation, stated the Council in its report.
With the level of construction activities continuing at an accelerated rate thus far in 2019, USSABC said the value of awarded contracts is on track to cross the SR200 billion ($53.3 billion) mark for the first time since 2015.
Further bolstering this notion is the y-o-y growth of contract awards during Q3’19 which jumped by 164 per cent compared to Q3’18.
Moreover, the first three quarters of 2019 witnessed a dramatic increase of SR87.2 billion ($23.3 billion) or 117 percent compared to the same period in 2018. As noted in our previous Q2’19 report, the value of awarded contracts thus far in 2019 has surpassed all that of 2018, further increasing during Q3’19 by a total of SR60.9 billion ($16.2 billion) or 60 per cent.
The USSABC Contract Awards Index (CAI) reached 236 points at the end of the third quarter. The CAI remained above the 200 point mark for the fourth consecutive month as the ramp up in awarded contracts during Q1’19 and continued momentum during Q2 and Q3 elevated the CAI into a very healthy environment.
The CAI marginally dipped compared to the previous quarter’s 240.44 points. However, the CAI grew by an impressive 111 percent y-o-y compared to Q3’18.
The CAI gradually decreased during Q3’19 as it reached 245.67 points in July, 242.21 points in August, and 236 points in September.
According to USSABC, the value of awarded contracts for the year continued to be dominated by the oil and gas sector.
The energy industry accounted for SR16.4 billion ($4.4 billion) or 34 per cent of the total value of awarded contracts. On a YTD (year-to-date) basis, the oil and gas sector has witnessed SR76.6 billion ($20.4 billion) or 47 per cent of all awarded contracts by value.
The real estate sector garnered SR12.1 billion ($3.2 billion) or 25 per cent of the total value of awarded contracts. Within the real estate sector, the mixed-use subsector generated the highest value of contracts with SR7.6 billion, followed by residential with SR4 billion ($1.1 billion) and commercial with SR490 million ($130 million).
Lastly, the industrial sector had SR9.6 billion ($2.6 billion) or 20 per cent worth of awarded contracts. The largest contract by value in the industrial sector pertained to the construction of a tyre manufacturing facility in the Eastern Province for the National Tire Company, it added.-TradeArabia News Service
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