Saudi Arabia - The total value of awarded contracts across Saudi Arabia for the third quarter of 2022 reached SR25.2 billion ($6.7 billion) as the construction sector is headlined by a number of Vision Realization Programs relating to tourism and housing along with physical infrastructure developments, according to a report by the US-Saudi Business Council.

Despite a dip in awarded contracts of 6% year-on-year during Q3, the value of awarded contracts thus far is on track to exceed 2021’s performance, stated the Council.

Through the first three quarters, the value of awarded contracts surged to hit SR119.7 billion ($31.9 billion), representing a 67% climb over last year.

The USSBC Contract Awards Index (CAI) retracted to 188.11 points by the end of the third quarter. The CAI dipped below 200 points to finish a quarter for the first time since the third quarter of 2021.

Although the CAI declined, the construction sector continues to operate in an expansionary environment as it remains well above the 100-point threshold that separates expansion from contraction, satted the Council in its report.

The CAI grew by 73.27 points (up 64%) YoY and decreased by 41.88 points (36%) QoQ.

The CAI’s performance during the first three quarters reveals the resurging health of the construction sector whereby the value of construction projects under execution continue to soar.

As construction activities lag behind the CAI, the value of executed projects witnessed a sizeable rebound after bottoming out in 2020, stated the Council in its report.

The gradual decrease in building material costs coupled with growing demand for cement has aided in the viability of projects currently in the execution stage along with developments that are on the short-term horizon.

The awarding of mega-projects across a number of sectors will keep construction activity buoyed in the coming years as VRP’s are expected to be delivered, it added.

According to the Council, the real estate sector rebounded from a soft Q2 with 15 contracts worth SR12.6 ($3.3 billion) being awarded during the third quarter.

Mixed-use real estate led with one contract worth SR7.5 billion ($2 billion), while the residential real estate market witnessed eight contracts worth SR4 billion ($1.1 billion), followed by commercial real estate with four contracts worth SR548 million ($146 million), and hospitality with two contracts worth SR544 million ($145 million).

Overall, the real estate sector grew by SR11.7 billion ($3.1 billion) QoQ during Q3 and increased by SR6.3 billion ($1.7 billion) or 102% YoY.

Through the first three quarters of 2022 (YTD), real estate gained the third highest value of awarded contracts by sector with SR23 billion ($6.1 billion) (19%) of the total, after transportation and oil & gas.

On a YoY comparison, the real estate sector’s awarded contracts grew by SAR9.7 billion ($2.6 billion) or 73 percent.

With regard to the transportation sector, the Council said it witnessed a drop in contract awards during Q3 but remained the second highest performer with a value of SR3.4 billion ($912 million).

The 12 contract awards during the quarter were dominated by Neom’s four infrastructure and earthwork packages pertaining to The Line’s highspeed rail link called ‘The Spine.’

The transportation sector declined by SR18.9 billion ($5 billion) QoQ but advanced by SR780 million ($208 million) or 30% YoY.

On a YTD basis, the transportation sector has attracted SR32.6 billion ($8.7 billion) in contract awards or 27% of the total, which ranks at the top.

On a YoY comparison, the transportation sector remains well ahead of last year’s pace as it posted an increase by SR8.1 billion ($2.2 billion) or 303%.

On the water industry deals, the Council report said the sector maintained its position as the third highest awarder of contracts from last quarter hitting SR3.2 billion ($863 million).

All four contracts were awarded by SWCC and NWC evenly, and involved the construction of reservoirs, pump stations, water transmission pipelines, and developing sewage networks, stated the Council.

On a year-to-date basis, the water sector has garnered SR12.6 billion ($3.4 billion) in awarded contacts or 11% of the total, which ranks as the fourth highest.

The water sector increased by SR555 million ($148 million) or 5% when compared to the same period in 2021, it added.

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