Foreign investment in the Saudi construction sector jumps 66.7% during 2023

The number of foreign investment licenses in the Saudi building and construction sector jumped by 66.7% during the past year compared to the previous year.

According to data from the Ministry of Investment, seen by Al-Eqtisadiah, the number of foreign investment licenses in the building and construction sector reached 742 licenses in 2023, while the number of licenses did not exceed 445 licenses in 2022.

The value of net foreign direct investment flows in Saudi Arabia during the fourth quarter of 2023 amounted to more than 13 billion riyals, recording an increase of more than 16.0% compared to the third quarter of the same year, which amounted to about 11 billion riyals.

Ahmed Kawthar, head of the contractors and building technologies team at the Jeddah Chamber, told Al-Eqtisadiah, “The developments that the contracting sector has witnessed in recent years, such as the Saudi building code, in addition to the development of the Saudi Contractors Authority, and mega projects, have directly contributed to attracting capital.” Foreign investment in the sector and seizing opportunities that created a competitive environment and attracted expertise.

For his part, Sultan Al-Khalidi, a financial analyst, explained that qualitative foreign investment has been active over the past two years, especially in the field of construction and building, specifically in cities and regions that have undergone horizontal demographic expansion, in addition to the variation in demand and supply, which has contributed greatly to the competitiveness of foreign investment to enter the market and seize opportunities. Investment, especially in mega projects in NEOM and the eastern and central region, which are among the most attractive areas.

He stated that Saudi Arabia was interested in developing the sector through regulations and legislation, so that it would be one of the sectors supporting raising the gross domestic product over the coming years, starting from 2024-2030.

Regarding the challenges facing the construction sector, Al-Khalidi said, “Even if there are global challenges, Saudi Arabia will be an investment attraction, given some fundamental economic indicators that prepare the investor for financial sustainability for decades, including the low inflation index.”

He stressed that this is at the residential level, while at the governmental level there is very strong qualitative logistical cooperation and a strategic alliance for some joint projects between the Ministry of Housing and foreign development companies, and this in itself is considered a fruitful future in the construction sector throughout the remaining period of achieving the goals and projects of the vision.