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20 April 2024

Saudi construction deals down

By Staff

Constructions deals awarded in Saudi Arabia declined by around 13 per cent during 2012 although the contracts recorded a sharp rise in the fourth quarter, according to the Gulf Kingdom’s largest bank National Commercial Bank (NCB) said the value The value “rebounded strongly” in the fourth quarter following a relatively weak third quarter of 2012 to reach SAR69.1 billion.

The strong push during the fourth quarter allowed 2012 to end on a high note whereby approximately SAR235.1 billion worth of contracts were awarded, it said.

“Although the value of awarded contracts dipped compared to 2011’s SR270 billion, several sectors witnessed unprecedented capital spending compared to previous years such as the power (SR47b), petrochemicals (SR47b), healthcare (SR14b) and roads (SR17b),NCB said in a study sent to Emirates 24./ In the fourth quarter alone, the contracts awarded in oil and gas sector amounted to about SR26 billion, while the power sector accounted for another SR16 billion.

The industrial sector contributed SR6 billion during the fourth quarter, while the commercial real estate and education sectors had SR3.5 billion and SAR3 billion worth of contracts awarded, respectively.

“The SAR235.1 billion in contracts awards during 2012 reflected the construction industry’s continued vibrancy and its foundation as a fundamental building block of the Kingdom’s economy,” the study said.

The figures showed the total value of awarded contracts during the second half of 2012 stood at around SAR108.3 billion compared with nearly SR126.7 billion in the first half.

The Construction Contracts Index (CCI) ended the year at 264.26 points, it said, adding that the CCI reached its highest level of 2012 during October as it climbed to 350.71 points. “This was mainly attributed to the significant value of awarded contracts during the same month, which was SR44.5 billion.”

The reported noted that the year 2012 provided the Saudi economy with a continued solid, sustainable outlook of the construction sector.

“The sheer volume of awarded contracts indicates that 2013 will extend the familiar trend of significant, ongoing construction projects in their execution phase, of which the majority that were awarded in 2012 have already been initiated,” it said.

“The government’s projected expenditures for 2013 reveal that heavy capital spending will remain as status quo. Therefore, we project capital expenditures to reach SR269.7 billion in 2013, reflecting a modest two per cent increase over 2012’s SR264 billion.”

NDB said government’s intent to continue to spend heavily in the education, health, municipality, transportation and water sectors will allow for further growth of these sectors in 2013 compared to 2012.