Arabian Business reported that Saudi Arabia's construction industry will continue to present opportunities to investors over the next 4 years as infrastructure continues to be central to the government's expenditure plans.
Business Monitor International is forecasting nearly seven percent growth in the kingdom's construction sector in 2010, fuelled by billions of dollars of projects either in the pipeline or currently under way.
According to BMI's Key Projects Database, USD 80 billion worth of infrastructure projects are currently under way in the county. Based on the number of ongoing projects, BMI analysts said that they are optimistic for the medium term outlook for Saudi Arabia with average real growth of 4.13% forecast per year between 2010 and 2014.
The report said that although not exactly booming, considering the size of the industry, it is strong growth. Industry value is forecast to rise from SAR 92.2 billion to SAR 122.48 billion over the same time period.
BMI said that this is couched in strong fundamentals for continued demand for construction projects, from housing to transport. Saudi Arabia's strong native population is a key factor behind the stable and growing demand for infrastructure in the country. Another integral element is the government's commitment to infrastructure investment and its ability to support these plans with funding.
BMI analysts said that with the capital to back up projects running into the billions, planned infrastructure projects are likely to be pushed through even if private financing is unavailable. The Saudi Arabia's construction sector grew by 4.71% in 2009, citing data from the Saudi Arabian Monetary Agency, coming in above BMI's estimates for the country.
The report said that this strong growth in the face of difficult access to credit and a global recession illustrates just how resistant the Saudi Arabian construction industry is. Compared to many other countries in the region which rely of demand from expatriates or the tourism sector. Saudi Arabia's infrastructure projects are in response to actual, sustainable demand from a native population.
It said that housing would be one of the strongest sectors going forward, as the government plans to invest heavily in affordable housing to meet a substantial shortfall in units.