Saudi H1 contracts worth SR102bn

Saudi Arabia awarded contracts worth more than SR102 billion (Dh101 billion) in the first half of 2013 and a large part of them was in the construction and real estate sectors, according to the Gulf Kingdom’s largest bank.

In the second quarter, the value of contracts awarded by the world’s dominant oil exporter stood at SR53.8 billion, extending growth in government contracts recorded over the previous month, National Commercial Bank (NCB) said in a study.

“The extended growth in the value of awarded contracts during Q2’13 resulted in approximately SR102.7 billion worth of contracts during H1’13,” it said.

The report, sent to Emirates 24/7, showed a majority of the contracts were dominated by the real estate sector, including residential and mixed-use, as it accounted for nearly 39% of the total value of awarded contracts during Q2’13.

Furthermore the real estate sector accounted for 30% of the value of awarded contracts during the first half of 2013, it said.

It showed the government sector played a significant role as it accounted for about 19% of the value of awarded contracts during Q2’13.

Contracts in the power, oil, gas and transportation sectors sustained the growth of the projects market by accounting for 23% of the total awarded contracts during Q2’13

“The strength of the Saudi construction market is manifested by the exerted pressure borne by government and private sectors to diversify expenditures across all sectors.”

The report showed there was a 19% fall in H1’13 compared to H1’12, which registered an impressive SAR126.7 billion worth of awarded contracts.

“Nonetheless, the second half of 2013 is likely to be infused with a high number of mega projects across numerous sectors, which in turn will lessen the difference in the value of awarded con-tracts with 2012,” it said.

The report showed that the geographical breakdown of awarded contracts by value reveals that the Makkah region captured the lion share of contracts.

The real estate sector was the main contributor to the Makkah region’s 36% share as one of the contracts was a SAR13 billion mixed-use real estate mega-project.

The Riyadh region controlled a 20% share of awarded contracts by value, which was spurred by investments across most of the sectors.

The Eastern Province lacked the usual mega-projects that are commonly witnessed in the oil, gas, petrochemical and industrial sectors causing it to comprise a 14% share of the value of awarded contracts, NCB said.

“The Saudi economy continues to benefit from the ongoing diversification of development strategies set forth by the government and implemented in partnership with the private sector,” it said.

“The magnitude of construction activities in the real estate sector in particular, reflects the need for continual large-scale projects to accommodate growing demand. Furthermore, sectors such as petrochemical and industrial have yet to take off in 2013 but are expected to account for a respectable share of the value of awarded contracts for the remainder of 2013.”

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