Construction is building up steam in the kingdom

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Branching out: Emaar Middle East’s US $27 billion (SAR100 billion) King Abdullah Economic City (KAEC) development on the Red Sea coast is an example of the kingdom’s attempts to pursue a policy of economic diversification, which is aimed at creating jobs in non-oil related industries.

Saudi Arabia has around one-fifth of the world's known oil reserves and over the past few years - due to sustained high oil prices - the country's economy has doubled, leading to an increase in construction activity. A dire need for housing and residential establishments due to the country's high birth rate and young population (an estimated 70% of Saudi nationals are under the age of 30) has caused a surge in construction activity and is expected to remain strong for the next few years.

Some analysts have estimated the kingdom will need as many as 2.6 million new homes by 2020 to be able to meet the demand.

This has led Saudi Arabia to pursue a policy of economic diversification aimed at creating jobs in non-oil industries.

Emaar Middle East's US $27 billion (SAR100 billion) King Abdullah Economic City (KAEC) development on the Red Sea coast is an example of this process.

KAEC will be built at a site near Rabigh, 200km northwest of Jeddah. It is the single largest private sector-led project in the region and has six key components: the Sea Port, Industrial Zone, Central Business District (including the Financial District), Resort District, Educational Zone and Residential Communities. Work is progressing according to schedule on the various zones and both the industrial and residential areas have already opened for investors.

A number of contracts have been awarded for the project, including one worth $35 million to Saudi Binladen Group for the construction of a 13km road from the KAEC main gate to the Bay La Sun Village residential community.

Al Saad General Construction also won a $28.4 million contract to build the management and services buildings in phase one of the Industrial Zone of KAEC.

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