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The Future of Construction in Saudi Arabia

VIEWS: 166 PAGES: 65

This report is the result of WMI’s extensive market, company and deals research covering the Saudi Arabian construction market. It provides detailed segmentation of historic and forecast construction sales, segmented to market and category level; analysis of the leading companies in the Saudi Arabian construction market and analysis of the key financial deals involving construction players in Saudi Arabia

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									       The Future of Construction in Saudi
       Arabia
       Market Intelligence Report

       Reference code: WMCN0128MR
       Published: March 2010




       www.worldmarketintelligence.com



       World Market Intelligence

       John Carpenter House
       7 Carmelite Street

       London EC4Y 0BS

       United Kingdom
       Tel: +44 (0) 20 7936 6400

       Fax: +44 (0) 20 7336 6813




© World Market Intelligence. This report is a licensed product and is not to be photocopied
 EXECUTIVE SUMMARY



1 Executive Summary

1.1 Construction Market Trend:

          Second largest Construction Market in the Middle East: Saudi Arabia, is the largest economy in the
          Middle East and is currently the second largest construction market in the region. The country dominated
          construction activity in the region before being overtaken by the UAE in 2008. According to the Saudi Ministry
          of Economy, in the Eighth National Development Plan 2005-2009, the contribution of the construction industry
          to the country’s Gross Domestic Product (GDP) increased to 7.3% in 2009 from 6.6% in 2004. The value of
          new construction contracts awarded to the major contractors in Saudi Arabia is expected to increase by
          15.4% to reach US$60 billion in 2010.

          Industry growth to surge with economic recovery: In real terms, the GDP in Saudi Arabia grew by
          0.15% in 2009 with non-oil sector GDP gaining 3%. However, driven by a massive post-crisis stimulus plan,
          the economy is expected to perform strongly in 2010, with growth estimates put at 3%. The country’s state
          spending programme plans to invest more than US$400 billion over the next five years to upgrade the
          country's infrastructure, airports, roads and power plants.




The Future of Construction in Saudi Arabia                                                           Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                       Page 2
 TABLE OF CONTENTS




TABLE OF CONTENTS

1      Executive Summary................................................................................................................. 2

1.1      Construction Market Trend: ................................................................................................................................ 2


2      Introduction .............................................................................................................................. 9

2.1      What Is This Report About?................................................................................................................................ 9

2.2      Definitions............................................................................................................................................................. 9

2.3      Summary Methodology ..................................................................................................................................... 10

2.4      Saudi Arabia Construction Industry ................................................................................................................ 11

2.5      Construction Industry Overview ...................................................................................................................... 11

2.6      Construction Market Data ................................................................................................................................. 12

2.7      Commercial construction .................................................................................................................................. 15
    2.7.1      Commercial construction overview ............................................................................................................... 15
    2.7.2      Commercial construction market data .......................................................................................................... 15

2.8      Infrastructure construction ............................................................................................................................... 19
    2.8.1      Infrastructure construction overview ............................................................................................................. 19
    2.8.2      Infrastructure construction market data ........................................................................................................ 19
    2.8.3      Industrial construction ................................................................................................................................... 24
    2.8.4      Industrial construction overview ................................................................................................................... 24
    2.8.5      Industrial construction market data ............................................................................................................... 24

2.9      Institutional construction .................................................................................................................................. 29
    2.9.1      Institutional construction overview ................................................................................................................ 29
    2.9.2      Institutional construction market data ........................................................................................................... 29

2.10     Residential construction ................................................................................................................................... 33
    2.10.1     Residential construction overview ................................................................................................................ 33
    2.10.2     Residential construction market data ........................................................................................................... 33


3      Contractor Profile: Al–Arrab Contracting Company Ltd. ................................................... 37

3.1      Al–Arrab Contracting Company Ltd. Company Overview ............................................................................. 37
    3.1.1      Al–Arrab Contracting Company Ltd. - Business Description ........................................................................ 37
    3.1.2      Al–Arrab Contracting Company Ltd. - Major Products and Services ........................................................... 38


The Future of Construction in Saudi Arabia                                                                                                           Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                                             Page 3
 TABLE OF CONTENTS



    3.1.3     Al–Arrab Contracting Company Ltd. - History .............................................................................................. 38

3.2     Al–Arrab Contracting Company Ltd. - SWOT Analysis ................................................................................. 39
    3.2.1     Al–Arrab Contracting Company Ltd. – Strengths ......................................................................................... 39
    3.2.2     Al–Arrab Contracting Company Ltd. – Weaknesses .................................................................................... 40
    3.2.3     Al–Arrab Contracting Company Ltd. – Opportunities ................................................................................... 40
    3.2.4     Al–Arrab Contracting Company Ltd. – Threats ........................................................................................... 41

3.3     Al–Arrab Contracting Company Ltd. – Company Information ..................................................................... 42
    3.3.1     Al–Arrab Contracting Company Ltd. - Key Competitors .............................................................................. 42
    3.3.2     Al–Arrab Contracting Company Ltd. - Key Employees ................................................................................ 42


4     Contractor Profile: El Seif Engineering Contracting Company Ltd. .................................. 43

4.1     El Seif Engineering Contracting Company Ltd. Company Overview ........................................................... 43
    4.1.1     El Seif Engineering Contracting Company Ltd. - Business Description ....................................................... 43
    4.1.2     El Seif Engineering Contracting Company Ltd. - Major Products and Services.......................................... 44
    4.1.3     El Seif Engineering Contracting Company Ltd. - History.............................................................................. 45

4.2     El Seif Engineering Contracting Company Ltd. – Company Information .................................................... 45
    4.2.1     El Seif Engineering Contracting Company Ltd. - Key Competitors .............................................................. 45
    4.2.2     El Seif Engineering Contracting Company Ltd. - Key Employees ................................................................ 45


5     Contractor Profile: Almabani General Contractors ............................................................ 46

5.1     Almabani General Contractors Company Overview ...................................................................................... 46
    5.1.1     Almabani General Contractors - Business Description ................................................................................ 46
    5.1.2     Almabani General Contractors - Major Products and Services .................................................................... 47
    5.1.3     Almabani General Contractors - History ....................................................................................................... 47

5.2     Almabani General Contractors – Company Information ............................................................................... 48
    5.2.1     Almabani General Contractors - Key Competitors ....................................................................................... 48
    5.2.2     Almabani General Contractors - Key Employees ......................................................................................... 48


6     Contractor Profile: Saudi Oger Limited ............................................................................... 49

6.1     Saudi Oger Limited Company Overview ......................................................................................................... 49
    6.1.1     Saudi Oger Limited - Business Description .................................................................................................. 49
    6.1.2     Saudi Oger Limited - Major Products and Services ..................................................................................... 51
    6.1.3     Saudi Oger Limited - History ........................................................................................................................ 51

6.2     Saudi Oger Limited – Company Information ................................................................................................... 52
    6.2.1     Saudi Oger Limited - Key Competitors ......................................................................................................... 52




The Future of Construction in Saudi Arabia                                                                                                Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                                 Page 4
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    6.2.2     Saudi Oger Limited - Key Employees ........................................................................................................... 52


7     Supplier Profile: Saudi Arabian Amiantit Co. ...................................................................... 53

7.1     Saudi Arabian Amiantit Co. Company Overview ............................................................................................ 53
    7.1.1     Saudi Arabian Amiantit Co. - Business Description ..................................................................................... 53
    7.1.2     Saudi Arabian Amiantit Co. - Major Products and Services ......................................................................... 55
    7.1.3     Saudi Arabian Amiantit Co. - History ............................................................................................................ 56

7.2     Saudi Arabian Amiantit Co. - SWOT Analysis................................................................................................. 58
    7.2.1     Saudi Arabian Amiantit Co. – Strengths ...................................................................................................... 58
    7.2.2     Saudi Arabian Amiantit Co. – Weaknesses .................................................................................................. 59
    7.2.3     Saudi Arabian Amiantit Co. – Opportunities ................................................................................................. 60
    7.2.4     Saudi Arabian Amiantit Co. – Threats .......................................................................................................... 61

7.3     Saudi Arabian Amiantit Co. – Company Information ..................................................................................... 61
    7.3.1     Saudi Arabian Amiantit Co. - Key Competitors ............................................................................................ 61
    7.3.2     Saudi Arabian Amiantit Co. - Key Employees .............................................................................................. 62


8     Supplier Profile: Yamama Saudi Cement Company Ltd. .................................................... 63

8.1     Yamama Saudi Cement Company Ltd. Company Overview ......................................................................... 63
    8.1.1     Yamama Saudi Cement Company Ltd. - Business Description ................................................................... 63
    8.1.2     Yamama Saudi Cement Company Ltd. - Major Products, Services and Brands ......................................... 64

8.2     Yamama Saudi Cement Company Ltd. – Company Information................................................................... 64
    8.2.1     Yamama Saudi Cement Company Ltd. - Key Competitors .......................................................................... 64
    8.2.2     Yamama Saudi Cement Company Ltd. - Key Employees ............................................................................ 64


9     Appendix ................................................................................................................................ 65

9.1     About World Market Intelligence ...................................................................................................................... 65




The Future of Construction in Saudi Arabia                                                                                             Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                             Page 5
 TABLE OF CONTENTS



LIST OF TABLES


Table 1:      World Market Intelligence Construction Category Definitions ......................................................................................... 9
Table 2:      Saudi Arabia Overall Construction Market (RLY m), By Project Type, 2004-2009 ........................................................ 13
Table 3:      Saudi Arabia Overall Construction Market Forecast (RLY m), By Project Type, 2009-2014 ......................................... 14
Table 4:      Saudi Arabia Overall Construction Market Segmentation (%), By Project Type, 2004-2014 ........................................ 14
Table 5:      Saudi Arabia Overall Construction Market (US$ m), By Project Type, 2004-2009 ........................................................ 14
Table 6:      Saudi Arabia Overall Construction Market Forecast (US$ m), By Project Type, 2009-2014 ......................................... 14
Table 7:      Saudi Arabia Commercial Construction Market (RLY m), By Project Type, 2004-2009 ................................................ 17
Table 8:      Saudi Arabia Commercial Construction Market Forecast (RLY m), By Project Type, 2009-2014 ................................. 17
Table 9:      Saudi Arabia Commercial Construction Market Segmentation (%), By Project Type, 2004-2014 ................................. 17
Table 10:     Saudi Arabia Commercial Construction Market (US$ m), By Project Type, 2004-2009 ................................................ 18
Table 11:     Saudi Arabia Commercial Construction Market Forecast (US$ m), By Project Type, 2009-2014 ................................. 18
Table 12:     Saudi Arabia Infrastructure Construction Market (RLY m), By Project Type, 2004-2009 .............................................. 21
Table 13:     Saudi Arabia Infrastructure Construction Market Forecast (RLY m), By Project Type, 2009-2014 ............................... 22
Table 14:     Saudi Arabia Infrastructure Construction Market Segmentation (%), By Project Type, 2004-2014 ............................... 22
Table 15:     Saudi Arabia Infrastructure Construction Market (US$ m), By Project Type, 2004-2009 .............................................. 22
Table 16:     Saudi Arabia Infrastructure Construction Market Forecast (US$ m), By Project Type, 2009-2014 ............................... 23
Table 17:     Saudi Arabia Industrial Construction Market (RLY m), By Project Type, 2004-2009..................................................... 26
Table 18:     Saudi Arabia Industrial Construction Market Forecast (RLY m), By Project Type, 2009-2014 ...................................... 27
Table 19:     Saudi Arabia Industrial Construction Market Segmentation (%), By Project Type, 2004-2014 ..................................... 27
Table 20:     Saudi Arabia Industrial Construction Market (US$ m), By Project Type, 2004-2009..................................................... 27
Table 21:     Saudi Arabia Industrial Construction Market Forecast (US$ m), By Project Type, 2009-2014 ...................................... 28
Table 22:     Saudi Arabia Institutional Construction Market (RLY m), By Project Type, 2004-2009 ................................................. 31
Table 23:     Saudi Arabia Institutional Construction Market Forecast (RLY m), By Project Type, 2009-2014 .................................. 31
Table 24:     Saudi Arabia Institutional Construction Market Segmentation (%), By Project Type, 2004-2014 .................................. 31
Table 25:     Saudi Arabia Institutional Construction Market (US$ m), By Project Type, 2004-2009 ................................................. 32
Table 26:     Saudi Arabia Institutional Construction Market Forecast (US$ m), By Project Type, 2009-2014 .................................. 32
Table 27:     Saudi Arabia Residential Construction Market (RLY m), By Project Type, 2004-2009 ................................................. 35
Table 28:     Saudi Arabia Residential Construction Market Forecast (RLY m), By Project Type, 2009-2014................................... 35
Table 29:     Saudi Arabia Residential Construction Market Segmentation (%), By Project Type, 2004-2014 .................................. 35
Table 30:     Saudi Arabia Residential Construction Market (US$ m), By Project Type, 2004-2009 ................................................. 35
Table 31:     Saudi Arabia Residential Construction Market Forecast (US$ m), By Project Type, 2009-2014................................... 36
Table 32:     Al–Arrab Contracting Company Ltd. Key Facts ............................................................................................................. 37
Table 33:     Al–Arrab Contracting Company Ltd. Major Products & Services................................................................................... 38
Table 34:     Al–Arrab Contracting Company Ltd. History ................................................................................................................. 38
Table 35:     Al–Arrab Contracting Company Ltd., Key Employees ................................................................................................... 42
Table 36:     El Seif Engineering Contracting Company Ltd. Key Facts ............................................................................................ 43




The Future of Construction in Saudi Arabia                                                                                                     Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                                      Page 6
 TABLE OF CONTENTS



Table 37:     El Seif Engineering Contracting Company Ltd. Major Products & Services .................................................................. 44
Table 38:     El Seif Engineering Contracting Company Ltd. History ................................................................................................. 45
Table 39:     El Seif Engineering Contracting Company Ltd., Key Employees .................................................................................. 45
Table 40:     Almabani General Contractors Key Facts ..................................................................................................................... 46
Table 41:     Almabani General Contractors Major Products & Services ........................................................................................... 47
Table 42:     Almabani General Contractors History .......................................................................................................................... 47
Table 43:     Almabani General Contractors, Key Employees ........................................................................................................... 48
Table 44:     Saudi Oger Limited Key Facts....................................................................................................................................... 49
Table 45:     Saudi Oger Limited Major Products & Services ............................................................................................................ 51
Table 46:     Saudi Oger Limited History ........................................................................................................................................... 51
Table 47:     Saudi Oger Limited, Key Employees ............................................................................................................................. 52
Table 48:     Saudi Arabian Amiantit Co.Key Facts ........................................................................................................................... 53
Table 49:     Saudi Arabian Amiantit Co. Major Products & Services ................................................................................................ 55
Table 50:     Saudi Arabian Amiantit Co. History ............................................................................................................................... 56
Table 51:     Saudi Arabian Amiantit Co., Key Employees ................................................................................................................ 62
Table 52:     Yamama Saudi Cement Company Ltd. Key Facts ........................................................................................................ 63
Table 53:     Yamama Saudi Cement Company Ltd. Major Products, Services & Brands ................................................................ 64
Table 54:     Yamama Saudi Cement Company Ltd., Key Employees .............................................................................................. 64




The Future of Construction in Saudi Arabia                                                                                                              Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                                                 Page 7
 TABLE OF CONTENTS




LIST OF FIGURES

Figure 1: Saudi Arabia Overall Construction Market & Market Forecast (RLY m), By Project Type, 2004-2014 .............................. 12
Figure 2: Saudi Arabia Overall Construction Market Dynamics, By Project Type, 2004-2014 .......................................................... 13
Figure 3: Saudi Arabia Commercial Construction Market & Market Forecast (RLY m), By Project Type, 2004-2014....................... 16
Figure 4: Saudi Arabia Commercial Construction Market Dynamics, By Project Type, 2004-2014 .................................................. 17
Figure 5: Saudi Arabia Infrastructure Construction Market & Market Forecast (RLY m), By Project Type, 2004-2014..................... 20
Figure 6: Saudi Arabia Infrastructure Construction Market Dynamics, By Project Type, 2004-2014 ................................................ 21
Figure 7: Saudi Arabia Industrial Construction Market & Market Forecast (RLY m), By Project Type, 2004-2014 ........................... 25
Figure 8: Saudi Arabia Industrial Construction Market Dynamics, By Project Type, 2004-2014 ....................................................... 26
Figure 9: Saudi Arabia Institutional Construction Market & Market Forecast (RLY m), By Project Type, 2004-2014........................ 30
Figure 10: Saudi Arabia Institutional Construction Market Dynamics, By Project Type, 2004-2014 ................................................. 30
Figure 11: Saudi Arabia Residential Construction Market & Market Forecast (RLY m), By Project Type, 2004-2014 ...................... 34
Figure 12: Saudi Arabia Residential Construction Market Dynamics, By Project Type, 2004-2014 .................................................. 34




The Future of Construction in Saudi Arabia                                                                                  Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                 Page 8
 DEFINITIONS & METHODOLOGY



2 Introduction

2.1 What Is This Report About?

       This report is the result of WMI’s extensive market, company and deals research covering the Saudi Arabian
       construction market. It provides detailed segmentation of historic and forecast construction sales, segmented to
       market and category level, analysis of the leading companies in the Saudi Arabian construction market and
       analysis of the key financial deals involving the construction players in Saudi Arabia.

       “The Future of Construction in Saudi Arabia” provides a top-level overview, as well as a detailed market and
       category and company-specific insights into Saudi Arabia’s construction industry environment. It is an essential
       tool for companies active across Saudi Arabia’s construction value chain and for new players considering entry
       into Saudi Arabia’s construction market.



2.2 Definitions

       All the data is collected in local currency. To avoid distortions due to currency fluctuations, all conversions into
       US$ (of current, historical and forecast data alike) are made at the average 2009 average conversion rate. All
       the values in tables are displayed to one decimal place and hence growth rates may appear inconsistent with
       the absolute values due to rounding errors.

       The key channels and categories featured in the report are defined below:


         Table 1:        World Market Intelligence Construction Category Definitions
         Category                                       Definition
         Commercial construction                        Commercial construction includes the construction of such projects as office buildings,
                                                        shopping centers, sports complexes and hotels.
         Infrastructure construction                    Infrastructure construction encompasses a range of heavy infrastructure construction
                                                        projects, including the construction of highways, bridges, tunnels, water lines, sewer
                                                        lines, pipelines, power and communication transmission lines., athletic fields, dams,
                                                        dikes, docks, drainage projects, golf courses, harbors, parks, reservoirs, canals, sewage
                                                        treatment plants, water treatment plants, subways and other mass transit projects
         Industrial construction                        This industry consists of the construction (including new build, extensions and major
                                                        rebuilds) of industrial buildings. The construction of selected additional structures, whose
                                                        production processes are similar to those for industrial buildings (e.g., incinerators,
                                                        cement plants, blast furnaces and similar non-building structures), is also included.
         Institutional construction                     Institutional construction includes buildings not included in the commercial category such
                                                        as educational institutions, research facilities, healthcare facilities and religious buildings.
                                                        They may be public or private-sector.
         Residential construction                       Residential construction includes the building, renovating and demolition of residential
                                                        buildings such as houses, townhouses, cottages, condominiums, single unit dwellings,
                                                        subdivisions and apartments.
        Source: World Market Intelligence analysis                                                                / © World Market Intelligence




The Future of Construction in Saudi Arabia                                                                                       Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                      Page 9
 DEFINITIONS & METHODOLOGY




2.3 Summary Methodology

       All WMI reports are rigorously sourced according to a comprehensive written methodology, based on intensive
       primary and secondary research and analysis.

       Company data: Company information is derived from company annual reports, statements and websites, news
       releases, external news sources and information providers. Analytical company content is created by WMI’s in-
       house analyst team based on published information, industry data and its industry expertise.

       Deals data: WMI’s deals reports database is derived from secondary sources including company annual
       reports, statements and websites, news releases, external news sources and information providers.

       Projects data: WMI’s project database is derived from secondary sources including company news releases,
       published invitations to tender, external news sources and information providers. WMI also carries out primary
       research using its in-house research team, contacting key figures within the project to verify its information and
       determine the latest project status and contract opportunities.

       Market data: WMI has a standard process for market data research across all of its products. Its market data
       research is based on:

                 Review of Existing Databases – WMI maintains databases of industry and company operational data
                 and analysis, which are used as the foundation for its market modeling activities.

                 Market Research – Collection of the latest market-specific data from a wide variety of respected
                 industry sources at both a national and international level. Sources used include government statistics,
                 trade associations, company filings, broker and analyst reports and official international sources.

                 Primary Research – WMI and its affiliates have a database of more than 300,000 executive survey
                 contacts from which it commission more than 30 global surveys every year covering the built
                 environment industry, including detailed information on current and expected market performance.

                 Data Consolidation – WMI’s analysts benchmark data from internal and external sources to verify
                 historical market data and to ensure that the latest year data is fully supported by external opinion.

                 Creation of Market Models – WMI feeds the latest macroeconomic data and specific market drivers
                 from national statistics offices and trade associations into its complex market models to generate
                 market forecasts.

                 Analyst Review – Modeled forecasts are refined by its experienced analyst teams, based on
                 information collected from primary and secondary sources across the industry.

                 Quality Control – WMI rigorously conduct checks on its data and processes throughout the production
                 of every market profile, to ensure that the highest levels of data quality are maintained across its
                 portfolio.




The Future of Construction in Saudi Arabia                                                               Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                          Page 10
CONSTRUCTION MARKET




2.4 Saudi Arabia Construction Industry

       This section of the report provides insight into Saudi Arabia’s construction industry at an overall level. It breaks
       the market down by type of project: commercial, infrastructure, industrial, institutional and residential
       construction.

2.5 Construction Industry Overview

          The construction industry in Saudi Arabia is one of the fastest growing markets in the Gulf region and
          represents the third largest sector of the Saudi economy, after oil and information & communication
          technologies (ICT). The industry has achieved strong growth over the review period. However, this growth
          has tapered slightly as a result of the global financial crisis. Growth was recorded at 10% in 2007, but fell to
          5% in 2008, and 3% in 2009.

          Construction in Saudi Arabia is focused on five main areas; Jeddah, Riyadh, Al-Khobar, Yanbu and Hail.
          These five areas constitute the vast majority of construction spending in the country.

          The Saudi government is attempting to stimulate industry growth with a massive post-crisis stimulus plan.
          The country is spending an estimated US$400 billion (RLY1.5 trillion) on large infrastructure projects over the
          next five years. Between October 2008 and April 2009, the government invested nearly US$137 billion
          (RLY513.8 billion) on construction projects.

          During the review period, industry growth in Saudi Arabia was largely driven by commercial construction,
          which grew at a CAGR of 9.63% and 8.22% respectively. The excellent growth in the construction of retail
          buildings has led to the growth of the commercial construction market. For the Saudi Arabian population,
          visiting shopping malls is one of the primary means of entertainment, due to restrictions on mixed gender
          locations and a ban on bars, clubs, movie theatres, concerts and other venues deemed inappropriate for their
          culture..

          The positive outlook of private-sector developers engaged in construction of commercial buildings in the
          country is expected to boost the country’s construction industry. Developers are mainly involved in the
          construction of high-rise commercial and mixed-use buildings, shopping malls, hotels and tourist resorts to
          cater to the demands of the rapidly growing population. Apart from commercial development, relaxation of
          foreign investment laws and government spending on infrastructure will also contribute to growth in industry.

          The fastest growing markets in the Saudi Arabia construction industry during 2009-2014 are commercial,
          infrastructure, and institutional constructions, which are expected to grow at a CAGR of more than 4%. The
          commercial construction market is expected to be driven by the continued growth in the construction of retail
          buildings. With the Saudi government continuing to promote capital development projects in the areas of
          power, desalination, roads and railways, the infrastructure market is forecast to be one of the primary drivers
          of market growth in the forecast period.

          Institutional construction is also expected to grow with the government allocation of funds for construction of
          92 new hospitals and a number of primary health care facilities.

          WMI estimates the Saudi Arabian construction industry to have a CAGR of 4.30% during 2009-2014, which is
          slower in comparison to a CAGR of 6.49% recorded by the industry over the period 2004-09.



The Future of Construction in Saudi Arabia                                                              Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                         Page 11
CONSTRUCTION MARKET




2.6 Construction Market Data

       The Saudi Arabian construction industry was valued at RLY 70.0 billion (US$18.7 billion) in 2009, a growth of
       2.8% on 2008. The industry achieved a CAGR of 6.49% over the period 2004-09.

       WMI expects the Saudi Arabian construction industry to be valued at RLY86.4 billion (US$23.1 billion) in 2014,
       compared to RLY70.0 billion (US$18.7 billion) in 2009. The industry is expected to achieve a CAGR of 4.30%
       over the period 2009-2014.

       The leading market in the Saudi Arabian construction industry was infrastructure construction with revenues of
       RLY27.5 billion (US$7.3 billion) in 2009, accounting for 39.3% of the overall construction industry. The second-
       largest market was residential construction, which accounted for a value of RLY21.4 billion (US$5.7 billion).
       Institutional construction, which accounted for RLY8.2 billion (US$2.2 billion), was the third-largest construction
       market.

       For 2010, WMI forecasts the corresponding figures to be RLY28.5 billion (US$7.6 billion) for infrastructure
       construction, RLY21.9 billion (US$5.8 billion) for residential construction, and RLY8.5 billion (US$2.3 billion) for
       institutional construction.

       Commercial construction was the fastest growing market in the Saudi Arabian construction industry, with a
       CAGR of 9.63% over the period 2004-09, followed by infrastructure construction with a CAGR of 8.22%, and
       institutional construction with a CAGR of 6.95% over the same period.

       WMI expects the commercial construction to be the fastest growing market in the Saudi Arabian construction
       industry, with a CAGR of 5.58% over the period 2009-2014, followed by infrastructure construction with a
       CAGR of 4.82%, and institutional construction with a CAGR of 4.13% over the same period.


         Figure 1: Saudi Arabia Overall Construction Market & Market Forecast (RLY m), By Project Type,
                         2004-2014
            100,000
             90,000
             80,000
                                                                                                                      Residential construction
             70,000
             60,000                                                                                                   Institutional construction
             50,000
                                                                                                                      Industrial construction
             40,000
             30,000
                                                                                                                      Infrastructure construction
             20,000
             10,000                                                                                                   Commercial construction
                  0
                       2004     2005    2006     2007     2008     2009    2010F    2011F     2012F   2013F   2014F




        Source: World Market Intelligence analysis                                                               / © World Market Intelligence




The Future of Construction in Saudi Arabia                                                                                    Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                      Page 12
CONSTRUCTION MARKET




         Figure 2: Saudi Arabia Overall Construction Market Dynamics, By Project Type, 2004-2014
                           7.0%

                           6.0%
                                                                                                                                               Commercial construction
                           5.0%                                                      Institutional construction
            CAGR 2009-14




                                                                                                                                 Infrastructure construction
                           4.0%

                           3.0%                                                    Industrial construction
                                                        Residential construction
                           2.0%

                           1.0%

                           0.0%
                              0.0%             2.0%                    4.0%                 6.0%                       8.0%                10.0%                 12.0%
                                                                                        CAGR 2004-09




        Source: World Market Intelligence analysis                                                                                    / © World Market Intelligence


       The following tables provide detailed data on Saudi Arabia’s overall construction market with both historic and
       forecast values, growth and share by project type, presented in RLY and in US$ at constant 2009 exchange
       rates:


         Table 2:                    Saudi Arabia Overall Construction Market (RLY m), By Project Type, 2004-2009

                                                                                                                                                                 CAGR
         Category                                       2004              2005            2006                 2007              2008              2009
                                                                                                                                                                2004-09

         Commercial construction                      4,715.5          5,200.0         5,743.3               6,478.1           6,959.7          7,469.0           9.63%
         Infrastructure construction              18,522.4           20,134.1         21,920.2           24,371.3             25,809.5         27,499.7           8.22%
         Industrial construction                      4,057.4          4,313.0         4,591.8               4,992.3           5,170.1          5,447.4           6.07%
         Institutional construction                   5,867.5          6,294.3         6,762.8               7,420.3           7,755.1          8,208.6           6.95%
         Residential construction                 17,978.2           19,004.5         20,120.9           21,755.0             22,404.6         21,401.4           3.55%
         Overall                           51,141.0                  54,946.0         59,139.0           65,017.0             68,099.0      70,026.0          6.49%
        Source: World Market Intelligence analysis                                                                                   / © World Market Intelligence




The Future of Construction in Saudi Arabia                                                                                                       Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                                    Page 13
CONSTRUCTION MARKET



         Table 3:        Saudi Arabia Overall Construction Market Forecast (RLY m), By Project Type, 2009-2014
                                                                                                                                         CAGR
         Category                               2009           2010             2011              2012        2013           2014
                                                                                                                                        2009-14
         Commercial construction              7,469.0        7,795.9         8,176.1            8,615.8     9,165.9        9,796.9        5.58%
         Infrastructure construction         27,499.7       28,497.6        29,673.3          31,045.0     32,790.4      34,796.8         4.82%
         Industrial construction              5,447.4        5,582.3         5,748.0            5,946.9     6,211.4        6,518.2        3.65%
         Institutional construction           8,208.6        8,450.4         8,741.2            9,085.0     9,532.6      10,049.3         4.13%
         Residential construction            21,401.4       21,870.6        22,457.3          23,169.8     24,133.2      25,254.9         3.37%
         Overall                           70,026.0         72,196.8        74,795.9          77,862.5     81,833.5      86,416.2          4.30%
        Source: World Market Intelligence analysis                                                               / © World Market Intelligence


         Table 4:        Saudi Arabia Overall Construction Market Segmentation (%), By Project Type, 2004-2014
         Category                                          2004                         2008                     2009                     2014
         Commercial construction                           9.2%                        10.2%                   10.7%                     11.3%
         Infrastructure construction                      36.2%                        37.9%                   39.3%                     40.3%
         Industrial construction                           7.9%                        7.6%                     7.8%                      7.5%
         Institutional construction                       11.5%                        11.4%                   11.7%                     11.6%
         Residential construction                         35.2%                        32.9%                   30.6%                     29.2%
         Overall                                        100.0%                        100.0%                  100.0%                    100.0%
        Source: World Market Intelligence analysis                                                              / © World Market Intelligence


         Table 5:        Saudi Arabia Overall Construction Market (US$ m), By Project Type, 2004-2009
                                                                                                                                        CAGR
         Category                               2004           2005            2006              2007        2008          2009
                                                                                                                                       2004-09
         Commercial construction             1,258.6        1,387.9         1,533.0            1,729.1     1,857.6       1,993.5         9.63%
         Infrastructure construction         4,943.8        5,374.0         5,850.7            6,504.9     6,888.8       7,339.9         8.22%
         Industrial construction             1,083.0        1,151.2         1,225.6            1,332.5     1,379.9       1,454.0         6.07%
         Institutional construction          1,566.1        1,680.0         1,805.1            1,980.6     2,069.9       2,190.9         6.95%
         Residential construction            4,798.6        5,072.5         5,370.5            5,806.6     5,980.0       5,712.2         3.55%
         Overall                           13,650.0        14,665.6        15,784.8           17,353.7    18,176.3      18,690.6          6.49%
        Source: World Market Intelligence analysis                                                               / © World Market Intelligence


         Table 6:        Saudi Arabia Overall Construction Market Forecast (US$ m), By Project Type, 2009-2014
                                                                                                                                        CAGR
         Category                               2009           2010            2011              2012        2013          2014
                                                                                                                                       2009-14
         Commercial construction             1,993.5        2,080.8         2,182.3            2,299.6     2,446.5       2,614.9         5.58%
         Infrastructure construction         7,339.9        7,606.3         7,920.1            8,286.2     8,752.1       9,287.6         4.82%
         Industrial construction             1,454.0        1,490.0         1,534.2            1,587.3     1,657.9       1,739.8         3.65%
         Institutional construction          2,190.9        2,255.5         2,333.1            2,424.9     2,544.4       2,682.3         4.13%
         Residential construction            5,712.2        5,837.5         5,994.1            6,184.2     6,441.4       6,740.8         3.37%
         Overall                           18,690.6        19,270.0        19,963.8           20,782.3    21,842.2      23,065.3          4.30%
        Source: World Market Intelligence analysis                                                               / © World Market Intelligence




The Future of Construction in Saudi Arabia                                                                                Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                            Page 14
CONSTRUCTION MARKET




2.7 Commercial construction

        The commercial construction market is defined as the construction of projects such as office buildings (public-
        and private-sector), shopping centers, sports complexes and hotels.


2.7.1     Commercial construction overview

          Commercial construction achieved strong growth in the Saudi Arabian construction industry during 2004-09.
          An increase in the number of retail buildings due to the increasing popularity of shopping malls in the country
          has spurred growth in commercial construction. The retail buildings category grew at a CAGR of 15.84%
          during 2004-09.

          The demand for retail buildings is expected to see continued growth during the forecast period. The office
          building category is also expected to witness strong growth with the development of King Abdullah Financial
          District in Riyadh. This is the largest financial center in the Middle East, spread over an area of 1.6 million
          square meters (sqm) and offering floor space of around 3.3 million sqm.

          WMI expects the commercial construction market to continue to be the fastest growing market in Saudi
          Arabian construction industry over the period 2009-2014, recording a CAGR of 5.58%.

2.7.2     Commercial construction market data

        The Saudi Arabian commercial construction market was valued at RLY7.5 billion (US$2.0 billion) in 2009, a
        growth of 8.8% on 2008. The market achieved a CAGR of 9.63% over the period 2004-09.

        WMI expects the Saudi Arabian commercial construction market to be valued at RLY9.8 billion (US$2.6 billion)
        in 2014, compared to RLY7.5 billion (US$2.0 billion) in 2009. The market is expected to achieve a CAGR of
        5.58% over the period 2009-2014.

        The leading category in the Saudi Arabian commercial construction market was office buildings with revenues
        of RLY3.9 billion (US$1.0 billion) in 2009, accounting for 52.5% of the overall commercial construction market.
        The second-largest category was retail buildings, which accounted for a value of RLY1.9 billion (US$0.5 billion).
        Other commercial construction, which accounted for RLY0.8 billion (US$0.2 billion), was the third-largest
        commercial construction category.

        For 2010, WMI forecasts the corresponding figures to be RLY4.1billion (US$1.1 billion) for office buildings,
        RLY2.0 billion (US$0.5 billion) for retail buildings, and RLY0.7 billion (US$0.2 billion) for the other commercial
        construction.

        Retail buildings was the fastest growing category in the Saudi Arabian commercial construction market, with a
        CAGR of 15.84% over the period 2004-09, followed by office buildings with a CAGR of 13.91%, and leisure &
        hospitality buildings with a CAGR of 8.58% over the same period.

        WMI expects the retail buildings to be the fastest growing category in the Saudi Arabian commercial
        construction market, with a CAGR of 7.26% over the period 2009-2014, followed by office buildings with a
        CAGR of 6.76%, and leisure & hospitality buildings with a CAGR of 3.90% over the same period.



The Future of Construction in Saudi Arabia                                                               Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                          Page 15
CONSTRUCTION MARKET




         Figure 3: Saudi Arabia Commercial Construction Market & Market Forecast (RLY m), By Project Type,
                         2004-2014
             12,000

                                                                                                                         Other commercial construction
             10,000

              8,000                                                                                                      Retail buildings

              6,000
                                                                                                                         Outdoor leisure facilities

              4,000
                                                                                                                         Office buildings
              2,000

                                                                                                                         Leisure & hospitality buildings
                  0
                       2004     2005    2006     2007    2008     2009    2010F    2011F      2012F   2013F   2014F




        Source: World Market Intelligence analysis                                                                    / © World Market Intelligence




The Future of Construction in Saudi Arabia                                                                                     Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                      Page 16
CONSTRUCTION MARKET



         Figure 4: Saudi Arabia Commercial Construction Market Dynamics, By Project Type, 2004-2014

                                                              10.00%

                                                               8.00%
                                                                                                                                                      Retail buildings
                                                                                                               Office buildings
                                                               6.00%
          CAGR 2009-14




                                                               4.00%        Leisure & hospitality buildings

                                                                 2.00%
                                        Outdoor leisure facilities
                                                               0.00%
                   -10.00%                  -5.00%                 0.00%                 5.00%                  10.00%                    15.00%                 20.00%
                                                              -2.00%

                                                              -4.00%
                             Other commercial construction
                                                              -6.00%
                                                                           CAGR2004-09

        Source: World Market Intelligence analysis                                                                                   / © World Market Intelligence


       The following tables provide detailed data on Saudi Arabia’s commercial construction market with both historic
       and forecast values, growth and share by project type, presented in RLY and in US$ at constant 2009
       exchange rates:


         Table 7:                  Saudi Arabia Commercial Construction Market (RLY m), By Project Type, 2004-2009
                                                                                                                                                                   CAGR
         Category                                               2004         2005              2006             2007              2008               2009
                                                                                                                                                                  2004-09
         Leisure & hospitality buildings                       370.9         410.6             452.4           506.0              528.6             559.7           8.58%
         Office buildings                                    2,042.4       2,384.9          2,770.4           3,264.4         3,600.6              3,917.9         13.91%
         Outdoor leisure facilities                            387.3         384.9             380.6           383.0              358.1             369.5          -0.94%
         Retail buildings                                      895.0       1,044.4          1,211.2           1,423.4         1,705.9              1,866.4         15.84%
         Other commercial construction                       1,019.9         975.3             928.8           901.3              766.6             755.5          -5.82%
         Overall                               4,715.5                     5,200.0          5,743.3           6,478.1         6,959.7       7,469.0         9.63%
        Source: World Market Intelligence analysis                                                                                 / © World Market Intelligence


         Table 8:                  Saudi Arabia Commercial Construction Market Forecast (RLY m), By Project Type, 2009-
                                   2014
                                                                                                                                                                   CAGR
         Category                                                2009         2010               2011           2012              2013               2014
                                                                                                                                                                  2009-14
         Leisure & hospitality buildings                        559.7        576.0             594.9            617.0             645.3             677.6           3.90%
         Office buildings                                     3,917.9       4,142.7          4,397.3          4,685.7         5,036.3              5,434.4          6.76%
         Outdoor leisure facilities                             369.5        370.8             373.6            377.8             385.2             394.4           1.31%
         Retail buildings                                     1,866.4       1,982.1          2,113.3          2,262.1         2,443.1              2,649.2          7.26%
         Other commercial construction                          755.5        724.3             697.0            673.3             655.9             641.3          -3.22%
         Overall                                7,469.0                     7,795.9          8,176.1          8,615.8         9,165.9       9,796.9         5.58%
        Source: World Market Intelligence analysis                                                                                 / © World Market Intelligence


         Table 9:                  Saudi Arabia Commercial Construction Market Segmentation (%), By Project Type, 2004-
                                   2014



The Future of Construction in Saudi Arabia                                                                                                         Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                                                       Page 17
CONSTRUCTION MARKET



         Table 9:           Saudi Arabia Commercial Construction Market Segmentation (%), By Project Type, 2004-
                            2014
         Category                                              2004                       2008                 2009                    2014
         Leisure & hospitality buildings                       7.9%                      7.6%                  7.5%                    6.9%
         Office buildings                                    43.3%                       51.7%               52.5%                    55.5%
         Outdoor leisure facilities                            8.2%                      5.1%                  4.9%                    4.0%
         Retail buildings                                    19.0%                       24.5%               25.0%                    27.0%
         Other commercial construction                       21.6%                       11.0%               10.1%                     6.5%
         Overall                                             100.0%                     100.0%              100.0%                   100.0%
        Source: World Market Intelligence analysis                                                           / © World Market Intelligence


         Table 10:          Saudi Arabia Commercial Construction Market (US$ m), By Project Type, 2004-2009
                                                                                                                                     CAGR
         Category                                  2004           2005           2006            2007      2008          2009
                                                                                                                                    2004-09
         Leisure & hospitality buildings             99.0        109.6          120.7            135.1    141.1         149.4         8.58%
         Office buildings                         545.1          636.5          739.5            871.3    961.0        1,045.7      13.91%
         Outdoor leisure facilities               103.4          102.7          101.6            102.2     95.6          98.6        -0.94%
         Retail buildings                         238.9          278.8          323.3            379.9    455.3         498.2       15.84%
         Other commercial construction            272.2          260.3          247.9            240.6    204.6         201.7        -5.82%
         Overall                               1,258.6         1,387.9        1,533.0         1,729.1    1,857.6       1,993.5         9.63%
        Source: World Market Intelligence analysis                                                            / © World Market Intelligence


         Table 11:          Saudi Arabia Commercial Construction Market Forecast (US$ m), By Project Type, 2009-
                            2014
                                                                                                                                     CAGR
         Category                                    2009          2010           2011            2012     2013          2014
                                                                                                                                    2009-14
         Leisure & hospitality buildings             149.4        153.7          158.8           164.7     172.2        180.9         3.90%
         Office buildings                        1,045.7        1,105.7        1,173.7        1,250.7    1,344.3       1,450.5        6.76%
         Outdoor leisure facilities                   98.6         99.0           99.7           100.8     102.8        105.3         1.31%
         Retail buildings                            498.2        529.0          564.1           603.8     652.1        707.1         7.26%
         Other commercial construction               201.7        193.3          186.0           179.7     175.1        171.2        -3.22%
         Overall                                1,993.5         2,080.8        2,182.3        2,299.6    2,446.5       2,614.9         5.58%
        Source: World Market Intelligence analysis                                                            / © World Market Intelligence




The Future of Construction in Saudi Arabia                                                                             Published March 2010

© World Market Intelligence. This report is a licensed product and is not to be photocopied                                         Page 18
CONSTRUCTION MARKET



2.8 Infrastructure construction

        The infrastructure construction market is defined as the construction of heavy infrastructure projects, including
        highways, bridges, tunnels, water lines, sewer lines, pipelines, power and communication transmission lines,
        athletic fields, dams, dikes, docks, drainage projects, golf courses, harbors, parks, reservoirs, canals, sewage
        treatment plants, water treatment plants, subways and other mass transit projects.

2.8.1     Infrastructure construction overview

        The Infrastructure construction market is the largest in the Saudi construction industry and was the second
        highest in growth terms over the period 2004-09. A rise in the construction of energy & communications
        infrastructure drove this growth. Although in terms of growth rate, sewage infrastructure recorded the highest
        CAGR of 17.03%, it accounted for only 8.0% of the market value in 2009. Energy & communications
        infrastructure was the largest contributor to the market, with a share of 32.1% and grew at a CAGR of 15.93%
        during 2004-09.

        Saudi Arabia, which has 27 airports, and about 60,000 km of highways, is expected to increase its development
        and expansion effort 
								
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