Saleh Fareed

Saudi Gazette

 

JEDDAH – The building and construction sector’s is looking brighter in Saudi Arabia because of new projects, improvements in infrastructure, the adoption of the mortgage law, renewable energy projects, the interest in the fields of environmental protection, and  the establishment of green initiatives,  according to an expert.



Economist Dr. Abdullah Marai bin Mahfouz, a member of the Jeddah Chamber of Commerce and Industry (JCCI), told the Saudi Gazette “I think that the most important features of the development which will appear in Saudi Arabia is an increase of private sector participation in the development process along with the role of economic growth through encouraging legislation and laws, in addition to escalating financial allocations for infrastructure projects, which will encourage growth in all business sectors in the Kingdom and level up the diversity of their investments.”



He stressed that the construction sector constitutes a major focus of development in Saudi Arabia and ranks second in the national economy after the oil sector while it contributes about 13, percent of non-oil GDP.



“Since there are more than 92 industry and activity linked to the real estate sector, some of which is linked to the phase of construction studies such as the offices of real estate studies and consulting, engineering and marketing companies. Some of which is linked to the construction phase, such as the contracting industry, building materials industry, while some of which is linked to after the construction phase, such as the operating and maintenance companies along with the other complementary industries to this sector. In recent years, it has been observed that the efficiency of the performance of the construction sector in Saudi Arabia has increased because of the augmented financial allocations from the budget of Saudi Arabia on infrastructure projects” he further said.



He noted due to the continuing increase in population of Saudi Arabia in recent years, and the arrival of population growth rate to 2.9 percent, the Saudi government has allocated recently a large sums of money on the development of infrastructure and superstructure and the establishment of schools, hospitals and the development of transport, railways and secure housing for its citizens.



Moreover, he said “this is in addition to an improvement in economic indicators and investment climate over the past years. All of these led to a positive impact on the performance efficiency of the building and construction sector while strengthening its material and technical abilities.”



The recent statistical data indicate that the building and construction sector has witnessed a remarkable development during the past five years, whereas the added value of the sector reached in 2012 to more than 97 billion riyals, and the value of capital assets for the building and construction sector amounted to more than SR190 billion in 2012.



Pointing at the challenges faced by the construction industry, Bin Mahfouz said “some of the most important include high operating costs due to increased prices of raw materials that go into the industry such as cement, iron and other raw materials for production. Furthermore, there has been an increase in labor costs, particularly after the imposition of fees on resident employees, which constitute more than 53 percent of the total workforce in the construction sector. Additionally, the raise of land prices, especially in big Saudi cities, which represent 55 percent of the cost of the housing unit, all of these obstacles have been faced by the industry.”