1. MARKET OPPORTUNITIES AND CHALLENGES
IN THE CONSTRUCTION INDUSTRY
KINGDOM OF SAUDI ARABIA
SAMER MOBAYED
9 March 2011

2. Agenda
 Introduction
 Construction Sector Overview
 Construction Opportunities in KSA
 XYZ’s Construction Industry
 Market Challenges & Possible Overcomes
S. MOBAYED / March 2011

3. Introduction
• Saudi Arabia represents one of the largest construction market
in the Middle East and one of the fastest growing markets in
the world.
S. MOBAYED / March 2011

4. Introduction
• Saudi Arabia represents the largest construction market in the
Middle East and one of the fastest growing markets in the
world.
• In recent years, record high oil prices and large oil revenues
have made it possible for the construction industry to employ
extra liquidity for its development.
• King Abdullah announced a $ 430b financial stimulus to
guarantee finance for development projects for the next five
years.
• This growth will be further supported by the 2011 Saudi budget
of $ 154.7b, the largest ever in the history of the country.
S. MOBAYED / March 2011

5. Introduction
• Saudi Arabia represents the largest construction market in the
Middle East and one of the fastest growing markets in the
world.
• In recent years, record high oil prices and large oil revenues
have made it possible for the construction industry to employ
extra liquidity for its development.
• King Abdullah announced a $ 430b financial stimulus to
guarantee finance for development projects for the next five
years.
• This growth will be further supported by the 2011 Saudi budget
of $ 154.7b, the largest ever in the history of the country.
• A large portion of this budget includes investments to improve
infrastructure, transport, education and real estate, all of which
will require construction related activity.
S. MOBAYED / March 2011

6. Construction Sector Overview
• Second’s largest value after UAE • 2011 biggest value of projects signed & planned
• Around 27% from total Gulf Total Projects • 2010– 2015 maintain highest values of projects
S. MOBAYED / March 2011

7. Construction Sector Overview
Building Construction sector is the largest between 2010-2015
S. MOBAYED / March 2011

8. Construction Opportunities in KSA
1- Economic Cities Project
S. MOBAYED / March 2011

9. Construction Opportunities in KSA
2 - Industrial Cities
Jubail Industrial City announces $30b
industrial mega projects
Ras Az Zawr Minerals Industrial City –
more than $15b contracts signed
Yanbu Industrial City – estimated $10b new
refinery
S. MOBAYED / March 2011

10. Construction Opportunities in KSA
3 – Major Economic sectors
Power & Water :
$40b budget from 2010 – 2015 for IWPPs.
Oil, Gas & Petrochemical :
Saudi Aramco to spend more than $ 124b (2009-2014)
SABIC budgeted $ 21b program to 2015
Transportation :
Railway –$ 25b investment
Roads – $ 6.5b budget
Airports & Ports - $ 6.7b budget
Tourism :
King Abdulaziz Cultural Center
Eastern Province –$ 4b investment
S. MOBAYED / March 2011

11. Construction Opportunities in KSA
4 – Major cities
Riyadh:
- Sudair City Development – $ 40b
- Princess Noura bint AbdulRahman
University for Women – $ 11.5b
Jeddah:
- Jeddah Mile High Tower - $13.6b
- Jeddah Hills Community- $11.2b
- Jeddah Gate Development – $ 1.6b
Dammam:
- Al Khobar Lakes Project – $ 1.2b
- Al Marina Project – $ 1b
S. MOBAYED / March 2011

12. Construction Opportunities in KSA
5 – Construction Supplies 6 – Areas of Construction
• Concrete / Cement • Structural Engineering
• Steel • Engineering Consultancy
• Tiles • Quantity Surveying
• Timber • Master Planning
• Hardware Products • Project & Construction Management
• Design – Urban & Green
• Creative Architecture
S. MOBAYED / March 2011

13. XYZ’s Construction Industry
• XYZ’s construction industry is one of the key
drivers in the growth of the ……..economy over the
last decade.
• The business opportunities for XYZ firms in the
construction sector in Saudi Arabia are very strong.
• Athlone-based company XYZ wins €1.5m Saudi
deal - As an XYZ client, XYZ initiated a successful
joint venture with XYZ.
• X Company Limited and XYZ announced a new
joint venture in Saudi Arabia with the XYZ Group,
a large Saudi Company.
XYZ MISSION
The mission of XYZ is to accelerate the
development of world-class ….. companies to
achieve strong positions in global markets resulting
in increased national and regional prosperity.
S. MOBAYED / March 2011

14. Major Market Challenges
Challenge Possible Overcomes
Challenge 1
- Saudi individuals and - Alliances and collaboration
establishments are given preference between local and Irish companies
over all other suppliers for - Regular contact between Irish and
Government contracts Saudi’s to build a “trust”
relationship
- Targeting non-government sector
Contracts
Challenge 2
Cultural/Regional Differences - Secure a good JV Saudi partner
- Visa restrictions and expatriate who can secure visas
recruitment regulations - Engage a good local employee or
- Legal and contractual differences consultancy who has experience of
- Timeline in securing & completing the regional practises
projects - Be aware of the challenges and be
prepared to meet them
S. MOBAYED / March 2011

15. Major Market Challenges
Challenge Possible Overcomes
Challenge 3
- Saudization – only few Saudis want - Recruiting & Training Saudi Youth
to work in the construction sector in ……. companies
due to the tough and unpredictable
nature of the job
Challenge 4
- Tendering for contracts in a very - Realistic profit margin expectation
competitive market - Target “niche” markets where
margins can be greater
- Appropriate bank facilities to
service the contract
- Look at alternative procurement
models
S. MOBAYED / March 2011

16. THANK YOU
Research
SAMER MOBAYED Market
Kingdom of Saudi Arabia
Mobile: +966 55 357 8485 Act Think
Email: samermobayed@hotmail.com
Plan Ahead