The Construction Business in Saudi Arabia: is it Promising?
Before the pandemic, the construction business in Saudi Arabia was highly promising for investors because the country is preparing for the Saudi Vision 2030. At that time, the government was planning numerous construction projects worth billions of dollars and trying to attract investors in this sector.
However, the pandemic has caused disruption to the planned projects and many of them are delayed. Despite this unfavorable condition, Saudi is still preparing for the Vision 2030. Therefore, the country makes the construction sector its priority and keeps focusing on construction development.
The Overview of Construction Business in Saudi Arabia
Some global investors are undecided whether to invest in the construction business in Saudi Arabia or not. Various factors cause them to think twice before making an investment in the sector.
- The Oil Price
The fall of oil price in early 2020 gave a huge impact to the Saudi economy. The economic slowdown was affecting most sectors in the country, including the construction sector. Due to this condition, the government was forced to cut its spending.
These days, the oil price increases slightly and is in the level of $50 to $60 per barrel. Meanwhile, the country’s fiscal breakeven oil price is around $80 per barrel. Therefore, the country cannot balance its budget and meet its immediate spending needs yet.
- Saudi Economy
Travel and tourism industry is the second most important sector after the oil and gas sector. Millions of people visit Saudi each year to perform Hajj and Umrah. However, the pandemic has affected this industry badly and Saudi economy.
In consequence, the government delayed construction projects related to halal tourism. It, of course, caused the investors to think twice before investing in the construction sector.
- Key Drivers of the Construction Sector
Despite the unfavorable economy of the country, the construction sector in Saudi still has a chance to be a promising industry for investors to enter. Some key drivers can be found in the country.
One of them is that the government needs to continue their planned construction projects in order to prepare for the Saudi Vision 2030. Therefore, the government will continue its support in this industry.
In addition, new technology adoption, the implementation of new operating standards, and the improvement of the global economy empower the industry effectively.
Tips investing in Saudi’s Construction Business
If you are interested in investing in the Saudi construction sector, it is essential for you to get a Saudi competitive Intelligence service from a Saudi market and business consultant.
The information about the competition in the industry allows you to understand your competitors, market trends, and customers of the industry. Therefore, you will be able to make the most profitable investment in the sector.
However, you need to make sure that you hire the best consultant so that you will get accurate competitive intelligence on the Saudi construction sector. You may need to conduct a research on several recommended consultants in order to find the best one to hire.
Saudi Arabia has giga construction projects that are waiting to be implemented. Therefore, the country is welcoming foreign investors to invest in these projects and you can seize this opportunity to gain large revenue.