JEDDAH: Saudi construction industry is poised to achieve a 4 percent growth to reach a value of SR87 billion ($23.19 billion) this year, the Saudi Arabia Infrastructure Report for the second quarter of 2011 said. The sector's annual growth is expected to be maintained at the same rate till 2015, a senior Drake & Scull International official said. Recent reports said over SR375 billion worth of social and economic infrastructure projects are under way or in the pipeline in Saudi Arabia. "Saudi Arabia has maintained a strong and sustainable demand for infrastructure projects, which is due to the growing Saudi national population with strong demographics, as 66 percent of the population is under 25, in addition to the expanding economy," said Khaldoun Tabari, CEO, Drake & Scull International PJSC (DSI). "The significant number of contracts in the tendering phase has also peaked investor interest in Saudi Arabia, with many regional construction companies focusing on the country for opportunities. Additionally, the SR580 billion national budget, which is the largest state expenditure to date, the SR290 billion homebuilding fund and the latest mortgage law represent a strategic incentive for our company to further expand and seek growth in the kingdom's attractive market," Tabari said. The Kingdom's construction sector recorded a big leap in the first quarter of 2011, with the value of contracts awarded by the government rocketing by more than five times over the same period of last year. National Commercial Bank (NCB) put the value of those contracts at around SR49.7 billion ($13.5 billion) in the first quarter of this year compared with SR8.8 billion ($2.37 billion) in the first quarter of 2010. NCB said in a study that more than a third of those contracts covered the oil and gas sector and expected a sharp rise in contract value through the year following King Abdullah's initiative. "The momentum that was witnessed during the end of 2010 has continued into the first quarter of 2011 as the total value of awarded contracts reached SR49.7 billion. The ongoing priorities to grow the kingdom's economic and social infrastructure as was set-forth in the 2011 budget has allowed the construction sector to continue its impressive growth," the study said. It said the value of contracts was the result of several mega-projects being awarded in sectors such as the transportation, oil and gas and power sectors. The oil and gas sector alone accounted for nearly 38 per cent of the total value of awarded con-tracts followed by the transportation and industrial sectors, each garnering 18 and 10 percent, respectively "The SR49.7 billion in awarded contracts during the first quarter of 2011 represents a significant jump compared to the same period last year when around SR8.8 billion worth of contracts were awarded," NCB said. "Additionally, the Construction Contracts Index (CCI) reached 187.6 points to end the quarter compared to the first quarter of 23010, which witnessed the CCI at 79.02 points. The CCI climbed to its highest point in February, reaching 225.5 point … given the high value of awarded contracts during Q1'11, the CCI is off to a fast start similar to 2009."
