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Wed 23 Nov 2011 05:43 PM

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Saudi construction contracts exceed $25bn in Q3

Construction Contract Index says sector set to continue to see growth to end-2011

Saudi construction contracts exceed $25bn in Q3
Saudi Arabias construction sector is booming, according to National Commercial Bank

Saudi Arabia will see no near-term slowdown in the value of construction contracts being awarded as the kingdom continues to embark on mega infrastructure projects, National Commercial Bank said on Wednesday.

The bank's Construction Contract Index showed that a total of SR95.1bn ($25.3bn) worth of deals were awarded during the third quarter of 2011, more than in the previous two quarters of the year.

Awarded contracts so far this year have reached SR179.5bn, the index showed.

NCB said the value of 2011's contract has far exceeded those of last year and "has the potential to exceed 2009".

"Numerous mega-projects were signed during the third quarter that were balanced across several sectors signifying the strong health of the construction industry," NCB added.

The mixed-use real estate sector accounted for 26 percent of the third quarter's value of awarded contracts while the transportation and industrial sectors accounted for 16 percent and 15 percent respectively.

Third quarter construction deals were 104 percent up on the same period last year while the nine-quarter figure represented a 125 percent rise over 2010.

"The value of awarded contracts is showing no signs of slowing down as mega-projects continue to be awarded in record numbers," NCB said.

It added that the growth was an indication that the government continues to place an emphasis on capital expenditures to meet its commitment to improve the kingdom's infrastructure capabilities.

"We expect the value of awarded contracts to continue its strong push into Q4," the bank said, adding that Saudi Electricity Company is expected to award contracts worth SR10bn in the quarter.

The Construction Contract Index peaked at 358.6 points in July but eased to end the quarter at 316.4 points, compared to 172.8 points at the end of Q3 2010.

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