When economic activities across the world came to a sudden halt amidst the coronavirus pandemic, many different sectors and their supply chains were affected, from oil and gas, to retail, to media and entertainment. In Saudi Arabia, it was the construction industry that felt the biggest impact.
Many projects had been signed off on at the close of 2019, and were slated to begin their first phases of development in the new year. Saudi contractors stated supply chain disruption is one of the most pressing challenges the industry faces this year.
Now, with industries picking up activity and SOPs in place, analysts expect construction projects to rebound strongly, and work in urban expansion, as well as tourism development, to resume. Earlier concerns about economic losses over stalled projects are beginning to abate and the value of contracts awarded for the Red Sea Development Project is expected to surpass $1.8 billion in 2020.
With wider economic activities picking up pace, this will only support the sector’s recovery, and the return of construction operations to normal. This also means it will be possible to complete approximately 5,000 previously planned projects valued at 1.6 trillion dollars. With this massive portfolio resuming following coronavirus, the Saudi construction industry expects to see record growth in by the first quarter of 2021.
Industry leaders in construction contracting observed that the cautionary measures taken during coronavirus had a significant impact on construction, as this industry, much like others, modified its activities to meet new health and safety requirements. It was harder to know how these would affect the influx of revenues, caused delays, and interrupted supply chain flows.
Earlier, analysts predicted a twenty percent drop in the value of projects. Now, they note, that the spike in planned construction projects at the close of 2019 will not only save the industry in 2021, but also project massive growth for the region’s mega projects. The Red Sea Development Project alone, worth 613 million dollars in awarded contracts as of 2019, predicts a return of 1.8 billion dollars this year.
Qiddiya, Saudi Arabia’s most well-known entertainment mega project, secured the required permits needed to continue construction and maintain and monitor health and safety protocols during the pandemic. Part of the Kingdom’s Vision 3030 plan, Qiddiya is still on track for completion in 2021. With the shift away from an oil economy, it is vital to ensure the continuity of construction projects following the coronavirus, as they will bring needed market diversity to the region, including sports, arts, and entertainment.
Saudi Arabia’s megaprojects are also uniquely focused on environmentalism, a key market offering, as consumer demands become increasingly socially conscious. Developments are prioritizing the preservation of natural ecosystems, while offering prospective visitors the opportunity to experience car-free environments, observe marine and desert wildlife, and relax, all while reducing their carbon footprint. As travel cautiously opens, following coronavirus, the Kingdom is focused on becoming an international tourism and visitor destination.