market challenge & opportunities in construction sector in ksa

MARKET OPPORTUNITIES AND CHALLENGES IN THE CONSTRUCTION INDUSTRY

KINGDOM OF SAUDI ARABIA

SAMER MOBAYED9 March 2011

Introduction

Construction Sector Overview

Construction Opportunities in KSA

XYZ’s Construction Industry

Market Challenges & Possible Overcomes

Agenda

S. MOBAYED / March 2011

• Saudi Arabia represents one of the largest construction market in the Middle East and one of the fastest growing markets in the world.

Introduction


• Saudi Arabia represents the largest construction market in the Middle East and one of the fastest growing markets in the world.

• In recent years, record high oil prices and large oil revenues have made it possible for the construction industry to employ extra liquidity for its development.

• King Abdullah announced a $ 430b financial stimulus to guarantee finance for development projects for the next five years.

• This growth will be further supported by the 2011 Saudi budget of $ 154.7b, the largest ever in the history of the country.

Introduction


• Saudi Arabia represents the largest construction market in the Middle East and one of the fastest growing markets in the world.

• In recent years, record high oil prices and large oil revenues have made it possible for the construction industry to employ extra liquidity for its development.

• King Abdullah announced a $ 430b financial stimulus to guarantee finance for development projects for the next five years.

• This growth will be further supported by the 2011 Saudi budget of $ 154.7b, the largest ever in the history of the country.

• A large portion of this budget includes investments to improve infrastructure, transport, education and real estate, all of which will require construction related activity.

Introduction




• 2011 biggest value of projects signed & planned• 2010– 2015 maintain highest values of projects

• Second’s largest value after UAE • Around 27% from total Gulf Total Projects


Building Construction sector is the largest between 2010-2015



1- Economic Cities Project


2 - Industrial Cities

Jubail Industrial City announces $30b industrial mega projects

Ras Az Zawr Minerals Industrial City – more than $15b contracts signed

Yanbu Industrial City – estimated $10b new refinery




3 – Major Economic sectors


Power & Water :

$40b budget from 2010 – 2015 for IWPPs.

Oil, Gas & Petrochemical :

Saudi Aramco to spend more than $ 124b (2009-2014)

SABIC budgeted $ 21b program to 2015

Tourism :

King Abdulaziz Cultural Center Eastern Province –$ 4b investment

Transportation :

Railway –$ 25b investment

Roads – $ 6.5b budget

Airports & Ports - $ 6.7b budget

4 – Major cities

Jeddah:- Jeddah Mile High Tower - $13.6b- Jeddah Hills Community- $11.2b- Jeddah Gate Development – $ 1.6b



Riyadh:- Sudair City Development – $ 40b- Princess Noura bint AbdulRahman

University for Women – $ 11.5b

Dammam:- Al Khobar Lakes Project – $ 1.2b- Al Marina Project – $ 1b

• Structural Engineering

• Engineering Consultancy

• Quantity Surveying

• Master Planning

• Project & Construction Management

• Design – Urban & Green

• Creative Architecture

• Concrete / Cement

• Steel

• Tiles

• Timber

• Hardware Products


5 – Construction Supplies 6 – Areas of Construction


XYZ MISSION

The mission of XYZ is to accelerate the development of world-class ….. companies to achieve strong positions in global markets resulting in increased national and regional prosperity.


XYZ’s Construction Industry

• XYZ’s construction industry is one of the key drivers in the growth of the ……..economy over the last decade.

• The business opportunities for XYZ firms in the construction sector in Saudi Arabia are very strong.

• Athlone-based company XYZ wins €1.5m Saudi deal - As an XYZ client, XYZ initiated a successful joint venture with XYZ.

• X Company Limited and XYZ announced a new joint venture in Saudi Arabia with the XYZ Group, a large Saudi Company.

Possible Overcomes Challenge

- Alliances and collaboration between local and Irish companies

- Regular contact between Irish and Saudi’s to build a “trust” relationship

- Targeting non-government sector Contracts

Challenge 1- Saudi individuals and

establishments are given preference over all other suppliers for Government contracts

- Secure a good JV Saudi partner who can secure visas

- Engage a good local employee or consultancy who has experience of the regional practises

- Be aware of the challenges and be prepared to meet them

Challenge 2Cultural/Regional Differences- Visa restrictions and expatriate

recruitment regulations- Legal and contractual differences- Timeline in securing & completing

projects


Major Market Challenges

Possible Overcomes Challenge

- Recruiting & Training Saudi Youth in ……. companies

Challenge 3- Saudization – only few Saudis want

to work in the construction sector due to the tough and unpredictable nature of the job

- Realistic profit margin expectation- Target “niche” markets where

margins can be greater- Appropriate bank facilities to

service the contract- Look at alternative procurement

models

Challenge 4- Tendering for contracts in a very

competitive market


Major Market Challenges

Research

Market

Think

Plan Ahead

Act

THANK YOU

SAMER MOBAYEDKingdom of Saudi Arabia

Mobile: +966 55 357 8485Email: [email protected]

market challenge & opportunities in construction sector in ksa

Documents