Saudi Arabia Construction Industry Market Size & Forecast - by Value and Volume (area and units), 40+ Market Segments Across Residential, Commercial, Industrial, Institutional, Infrastructure Construction, City Level Construction by Value and Construction

According to ConsTrack360, construction market in Saudi Arabia is expected to grow by 6.2% on annual basis to reach SAR 232,147.3 million in 2025.

The construction market in the country experienced robust growth during 2020-2024, achieving a CAGR of 9.4%. This upward trajectory is expected to continue, with the market forecast to grow at a CAGR of 4.9% during 2025-2029. By the end of 2029, the construction sector is projected to expand from its 2024 value of SAR 218,587.7 million to approximately SAR 297,194.3 million.

This report provides a detailed data-centric analysis of the construction sector in Saudi Arabia, offering a comprehensive view of market opportunities in the building and infrastructure construction industry at the country level. With over 100+ KPIs covering growth dynamics in building and infrastructure construction, construction cost structure analysis, and analysis by key cities in the country, this databook provides a wealth of data-centric analysis with charts and tables, ensuring stakeholders are fully informed.

It offers a comprehensive analysis of market dynamics in the construction sector through a range of KPIs such as value, volume, and number of units. The building construction covers detailed segmentation over 30+ segments in residential, commercial, industrial, and institutional sectors.

ConsTrack360’s research methodology is based on industry best practices. Its unbiased analysis leverages a proprietary analytics platform to offer a detailed view of emerging business and investment market opportunities.

Key Insights

Saudi Arabia Residential Construction Industry
The outlook for Saudi Arabia’s residential construction sector remains exceptionally strong, driven by high demand and robust government support. Developers have clear mandates and substantial backing to deliver hundreds of thousands of homes, presenting significant market opportunities. Innovators who adopt fast-build techniques and ensure reliable supply chains stand to gain considerable advantages in this booming market. However, the sector faces critical challenges, notably rising construction costs and persistent labor shortages. To mitigate these risks, stakeholders are adopting cost-control measures such as bulk procurement, local manufacturing, and modular construction. Maintaining affordability for middle-income families is essential, requiring continued government incentives like subsidized loans and favorable financing terms. For senior executives, aligning closely with initiatives such as the Vision 2030 Housing Program and the Sakani scheme is crucial for reducing market risks. Given the concentration of demand and investment in Riyadh, an urban focus is advisable. At the same time, emerging opportunities in secondary cities and integrating sustainability and smart-home features can further enhance competitive advantage in an evolving market landscape.

Macroeconomic Factors
• Saudi Arabia is tasked with building approximately 115,000 homes annually to achieve a 70% homeownership target by 2030. Population growth and rapid urbanization drive demand while rising construction costs by 5–7% in 2024 add pressure on developers. Despite some cushioning from stable oil prices, elevated prices for key materials such as cement and steel compound these challenges.
• Higher global interest rates have increased the cost of financing and mortgages, even as programs like Sakani help support homebuyers. Mild real estate inflation, with residential prices, underscores the strength and heat of the market. In Riyadh, for example, apartment prices have surged by 62% over the past three years, highlighting strong demand and affordability concerns.
• Key economic trends include robust non-oil growth at 4% in 2023, which has spurred job creation and a rise in young families seeking housing. The government’s efforts have boosted residential construction spending from 5% to 8.5% of non-oil GDP by 2022, signaling strong support for the sector. However, risks persist if construction delays lead to supply shortages or overbuilding in emerging cities, creating long-term market imbalances.

Project Landscape
• Mega housing developments are at the core of Saudi Arabia’s residential construction initiatives, with public developers driving the effort. ROSHN, a PIF-owned entity, plans to invest SAR 350 billion (around $93 billion) to build integrated communities capable of housing 5 million people. Flagship projects such as Sedra in Riyadh and Alarous in Jeddah offer comprehensive amenities like schools, parks, and retail facilities, aiming to enhance the quality of life.
• Public-private housing initiatives are accelerating project delivery through strategic partnerships. The National Housing Company (NHC) is collaborating with international developers, including Egypt’s Talaat Moustafa Group, to build 27,000 homes and China’s CITIC to establish a building materials industrial city. These initiatives secure the supply chain—with plans for 12 new factories—and leverage foreign expertise to enhance construction efficiency.
• Geographically, Riyadh leads the residential boom, evidenced by a 52% surge in property transactions in 202 Major projects, such as New Murabba in Riyadh, are slated to add 104,000 housing units by 2030, while other cities like Jeddah and Dammam are also seeing significant developments.

Government Policies & Programs
• The Vision 2030 Housing Program is a central pillar of Saudi Arabia’s residential strategy, aiming to boost homeownership to 70% by 2030. Under this program, the Ministry of Municipal, Rural Affairs & Housing (MOMRAH) and the National Housing Company (NHC) provide essential support through land allocation, financing, and regulatory measures. This framework encourages affordable housing development and fosters public-private partnerships throughout the sector.
• Subsidies and financing initiatives are also key market drivers. Through the Sakani program, the government offers eligible citizens down-payment assistance, subsidized loans, and mortgage guarantees, thereby stimulating construction demand. Additional measures, such as widened tax exemptions on real estate transactions and a streamlined digital property registration system, further incentivize market activity.
• Land use and ownership reforms are transforming the residential landscape by mobilizing undeveloped urban land through fees and digital record management. Easing restrictions on foreign property ownership, as seen with the introduction of premium residency options in early 2024, is expected to boost high-end residential projects. Centralized oversight by bodies like MOMRAH and the State Properties General Authority ensures these policies are implemented effectively, reinforcing market stability and confidence.

Industry-Specific Developments
• The residential construction sector rapidly embraces advanced technologies to improve efficiency and reduce costs. Modular construction and prefabrication techniques are becoming more prevalent, exemplified by NEOM’s use of 90% prefabricated components. In addition, developers are increasingly adopting Building Information Modeling (BIM) to streamline design processes and reduce errors in large-scale projects.
• Efforts to secure materials and boost sustainability are also driving industry transformation. The NHC-CITIC agreement to establish a domestic building materials hub—with plans for 12 new factories—aims to stabilize material supply and reduce dependence on imports. At the same time, green building practices such as installing solar water heaters, efficient insulation, and integrating expansive green spaces in ROSHN communities are gaining traction.
• Workforce challenges continue to shape the sector, with acute shortages in both skilled trades and unskilled labor. Contractors are addressing these gaps by recruiting internationally, upskilling local workers, and incorporating automation technologies such as bricklaying machines and digital site monitoring. Additionally, Saudization policies promote the employment of Saudi engineers and project managers, helping to gradually build local capacity and modernize the industry’s market structure.

Saudi Arabia Commercial Construction
The commercial construction sector in Saudi Arabia presents unmatched growth opportunities driven by ambitious government-backed initiatives and a thriving tourism and business landscape. With significant projects ranging from iconic entertainment hubs to state-of-the-art office parks, companies can participate in globally significant developments. Early involvement in these giga-projects can yield first-mover advantages as the market expands.However, the sector faces significant execution risks due to the concurrent rollout of mega-projects, which could lead to delays, contractor capacity issues, and cost overruns. Firms must proactively mitigate these risks by securing long-lead materials and diversifying the contractor base. Additionally, the potential for oversupply of commercial space in some locales necessitates careful, strategic phasing of projects.Collaborating strategically with government initiatives like the PIF and aligning with Vision 2030 themes are essential for success. Emphasizing quality, differentiation, and sustainable design will help projects stand out in a competitive market. For construction firms, investing in a skilled workforce and advanced project management technologies while planning for long-term operational efficiency is key to capturing high rewards in this dynamic environment.

Macroeconomic Factors
• Saudi Arabia’s commercial construction sector is experiencing a transformative shift driven by a massive diversification push into tourism, hospitality, and entertainment. The government is investing approximately $800 billion to transform the Kingdom into a global tourism hub with a target of 150 million visitors annually by 2030. This initiative is directly fueling demand for hotels, resorts, malls, and recreational facilities, with plans to boost the number of hotel rooms from around 300,000 to 550,000 by 2030.
• Economic liberalization and the Regional Headquarters (HQ) Program have turned Riyadh into a major business hub, attracting over 500 multinational companies to establish regional head offices. Due to tight supply conditions, this influx has driven Grade A office rents up by about 31% over the past year. Commercial developers anticipate a major office space expansion, with an additional 1 million m² of new stock expected by 2026.
• Despite robust demand, commercial builders face elevated construction costs, with inflation pushing prices up by 5–7% in 202 Imported fit-out materials for high-end projects add to the cost volatility, although stable oil revenues and strong investor confidence keep financing accessible. Trends such as experiential retail and the resurgence of religious tourism are reshaping the market, even as developers contend with potential project crowding and absorption risks.

Project Landscape
• Mega mixed-use projects are redefining the commercial landscape, with developments like Diriyah Gate and Qiddiya leading the way. Diriyah Gate, a $63 billion heritage-tourism city near Riyadh, and Qiddiya, a $9.8 billion entertainment city, blend commercial, hospitality, and residential elements into iconic destinations. These projects are funded through a mix of public investment via the PIF and strategic private co-investment, setting new benchmarks for urban development.
• Riyadh is at the heart of a retail and mixed-use transformation, with projects like New Murabba emerging as modern downtown districts spanning 19 km². Valued at approximately $50 billion, New Murabba will feature the 400m-high Mukaab skyscraper alongside extensive retail space, 9,000 hotel rooms, and a wide array of entertainment facilities. Complementary projects in Jeddah and north Riyadh also expand retail and commercial capacity, driven by strong rental growth and high occupancy rates.
• The hospitality sector is equally dynamic, with global hotel chains expanding aggressively across the Kingdom. Hilton, for example, plans to quadruple its presence, while Marriott, Accor, and IHG are launching new projects in partnership with local firms. This blend of public-sector backing and surging private investment is creating a robust pipeline for both urban business hotels and luxury resorts, reinforcing the sector's overall strength.

Government Policies & Programs
• The Saudi government is aggressively advancing tourism as a key component of Vision 2030, with initiatives managed by the Saudi Tourism Authority and supported by a $4 billion Tourism Development Fund. Policies such as easy tourist e-visas and the hosting of mega-events, including film festivals and Formula 1 races, are designed to attract international visitors and stimulate related construction. Budget allocations under the Quality of Life Program further bolster investment in culture, sports, and entertainment venues.
• Regulatory reforms have been pivotal in spurring commercial construction, with new ownership laws now permitting 100% foreign ownership in many real estate projects. The recent expansion of premium residency visas aims to boost foreign real estate investment. At the same time, the Regional HQ Program, effective in 2024, requires foreign firms to set up regional headquarters in Saudi Arabia. These measures have collectively spurred demand for modern office spaces and facilitated expedited permit processes for new developments.
• Public-private partnerships (PPPs) are central to financing and executing mega-projects in the commercial sector. The PIF frequently provides land and seed funding, inviting private equity to join these ventures. Tax incentives and long rent-free periods in special economic zones further enhance attractiveness. Local content regulations and new building codes emphasizing sustainability and accessibility help ensure that projects meet high standards, with dedicated authorities streamlining approvals and project execution.

Industry-Specific Developments
• Cutting-edge technology is at the forefront of commercial construction, with innovations such as digital twins and 3D modeling playing a vital role in designing complex projects like the Mukaab. On-site, the deployment of drones and AI-powered project management tools is enhancing safety and real-time progress tracking. Advanced construction techniques, including climbing formwork and pre-fabricated façades, significantly speed up high-rise construction in key business districts.
• Sustainability has emerged as a critical focus area, with many new hotels and malls striving for LEED certification or equivalent green standards. Projects like The Line at NEOM exemplify the drive toward sustainable design, incorporating features for a zero-car, 100% renewable energy environment. Architects are increasingly integrating solar shading, efficient cooling systems, and water recycling into their designs, aligning with the ambitious goals of the Saudi Green Initiative and meeting tenant demands for environmentally friendly spaces.
• The evolving market is also reshaping workforce dynamics, as the scale of commercial construction places high demands on specialized skills. To address these needs, companies are importing expertise while investing in local upskilling programs and vocational training in hospitality construction. With social reforms boosting female participation in design and project management roles and major firms engaging top global project managers, the sector is building a more robust and diverse workforce to support its expansive growth.

Saudi Arabia Institutional Construction
The institutional construction sector presents stable, mission-critical opportunities backed by robust government commitment to social infrastructure. With large-scale investments in healthcare and education, companies can secure long-term revenues while making a significant social impact. Public-private partnerships offer attractive prospects, particularly in projects that span 20-year management contracts.However, significant challenges exist in ensuring on-time delivery and maintaining high-quality standards across many concurrent projects. The rigidity of project timelines, especially in educational builds, means that delays could have serious social implications, such as leaving students without classrooms. Integrating advanced systems and managing resource allocation across multiple regions remains a persistent hurdle.Strategically, firms should align closely with Vision 2030 and related government programs to secure a competitive edge. Building consortiums or partnerships can help pool expertise and meet the high standards required for institutional projects. Adopting a lifecycle approach incorporating maintenance and operational efficiency into the initial design will be crucial for long-term success in this sector.

Macroeconomic Factors
• Strong government spending underpins the institutional construction sector in Saudi Arabia. Robust public expenditure is evident in the 2024–2025 budgets, with SAR 260 billion allocated for health and social development and SAR 201 billion dedicated to education. Despite a forecasted fiscal deficit, these significant investments reflect a firm commitment to expanding social infrastructure.
• Moderate inflation, around 5% in 2023, coupled with rising construction costs, means that each riyal generates slightly less output on major projects. Capital expenditure on infrastructure surged by 33% year-over-year in the first nine months of 2023, demonstrating the Kingdom’s determination to ramp up project outlays despite cost pressures. While imported medical equipment is subject to global inflation, prudent fiscal management helps cushion these challenges.
• Demographic trends further drive demand, as a young population over 60% under age 35 fuels the need for schools and universities, while an aging segment and overall population growth drive healthcare expansion. Institutional projects remain a high priority, with a target of 23 hospital beds per 10,000 people in key provinces and rising higher education enrollment. However, timely delivery and spending efficiency are critical risks, especially given bureaucratic delays and the expected shift toward greater private-sector participation.

Project Landscape
• Saudi Arabia is experiencing a hospital construction boom, with the government planning to open five new public hospitals by 2025 that will add 963 beds across various provinces. This expansion is part of a comprehensive healthcare enhancement plan designed to meet a target of 23 beds per 10,000 residents in strategic regions. In parallel, the private sector is also heavily investing, exemplified by projects like those led by Dr. Sulaiman Al-Habib Medical Group.
• Major investments are underway in the education sector to transform school and higher education infrastructure. The Ministry of Education, in collaboration with Tatweer Buildings Company, has launched multiple PPP waves, including a SAR 2 billion project in the Medina region that will benefit over 50,000 students. Additionally, established universities are expanding campuses, and new vocational training centers are being constructed to address evolving labor market needs.
• Institutional construction also encompasses civic and cultural projects that enhance public life and promote national identity. Projects like the King Salman Park in Riyadh include cultural institutions such as theaters and art museums, while initiatives in Diriyah are developing educational and arts districts with multi-billion dollar investments. The landscape is evolving toward mixed models where public funding initiates projects increasingly involving private sector operation, ensuring efficiency and sustainability.

Government Policies & Programs
• Vision 2030 social programs are a cornerstone of institutional construction, with initiatives such as the Health Sector Transformation and Human Capital Development Programs setting ambitious targets for new healthcare and educational facilities. These programs aim to expand capacity—for example, by increasing primary care centers and hospital beds—and enhance educational outcomes by boosting kindergarten enrollment and STEM training. The holistic strategy links infrastructure development directly with improved social outcomes.
• Public-private partnership (PPP) frameworks have been actively expanded to support the delivery of institutional projects. The National Centre for Privatisation (NCP) has issued guidelines and standard contracts that have enabled successful projects like the Al-Ansar Hospital and several waves of school construction. Complementing these efforts, regulatory reforms now provide incentives such as guarantees, availability payments, and favorable loan terms, which help mitigate financing risks and attract private investment.
• Direct government funding remains significant through specialized funds such as the Saudi Industrial Development Fund (SIDF) and the National Infrastructure Fund. These funds provide low-cost financing for projects and often include land grants for new hospital sites and schools, ensuring that critical infrastructure can be built at minimal cost to developers. Additionally, centralized oversight bodies have been established to enforce updated standards and ensure that projects meet quality and accessibility requirements.

Industry-Specific Developments
• Institutional projects are increasingly adopting efficient, standardized construction techniques to meet ambitious construction targets. Modular components and repeatable design templates, especially in PPP school projects, help speed up construction while ensuring consistent quality. In complex builds like hospitals, design-build contracts and advanced project scheduling methods such as 4D BIM streamline processes and reduce delays.
• Technological integration is now a key component of new institutional facilities. Modern hospitals are built with telemedicine infrastructure and high-speed data links, while new schools incorporate smart classroom systems with robust IT provisions. The close collaboration between the construction industry and ICT providers ensures that these facilities are “future-proof” and capable of supporting evolving digital health and education platforms.
• Sustainability and resilience are becoming critical design parameters for institutional buildings. Many new schools and healthcare centers feature solar panels, efficient cooling systems, and waste management systems to reduce operating costs and environmental impact. Moreover, focusing on long-term performance, contractors invest in training programs and local partnerships to maintain quality and safety standards throughout construction and beyond.

Saudi Arabia Industrial Construction
The industrial construction sector is a critical pillar of Saudi Arabia’s Vision 2030, offering substantial opportunities for companies with the right expertise. Mega-projects in petrochemicals, mining, and advanced manufacturing provide high-value prospects supported by attractive government incentives and low-cost financing. This environment is ideal for international firms with process-plant experience and local companies with strong execution capabilities.However, the sector also faces significant challenges due to the complexity and scale of projects, particularly in remote locations. Managing supply chain risks, navigating commodity price volatility, and meeting stringent local content and workforce requirements demand world-class project management and risk mitigation strategies. Competitive pressures are intensifying as more global firms enter the market, making technology differentiation and strategic partnerships essential.For long-term success, companies should align their strategies closely with Saudi Arabia’s industrial priorities and foster partnerships with key entities such as PIF, Aramco, and Ma’aden. Embracing local content mandates and investing in innovative, sustainable construction technologies will provide a competitive edge. A robust risk management framework—including financial hedging and contingency planning—will ensure that firms can effectively navigate the evolving market landscape and secure a lasting presence in the Kingdom’s industrial future.

Macroeconomic Factors
• Saudi Arabia’s diversification agenda drives a robust industrial expansion, as highlighted by the National Industrial Strategy (NIS) launched in 202 This strategy aims to triple industrial GDP and increase the number of factories to 36,000 by 2035, fueling a strong pipeline of projects from petrochemical plants to mining facilities. High oil revenues reinvested into new industries support these ambitious growth plans.
• The oil & gas sector remains a critical funding source, with recent high oil prices boosting confidence and enabling mega-projects like the $11 billion Amiral Petrochemical Complex. Despite potential risks from oil price fluctuations that might slow some projects, Saudi Arabia’s substantial financial reserves ensure that key initiatives will continue. The strategic importance of industrial diversification means that core projects will likely proceed with only minor delays, even during downturns.
• Global demand for petrochemicals, metals, and fertilizers is also propelling industrial expansion as the Kingdom seeks to capitalize on rising international markets. However, volatility in commodity prices poses a risk, which is partially mitigated by the country’s cost advantages, such as cheap energy and feedstock. In addition, rising global inflation and supply chain challenges are being addressed through strategic partnerships that localize production and reduce reliance on imports.

Project Landscape
• Saudi Aramco is spearheading major oil & gas projects, exemplified by Jubail's $11 billion Amiral Petrochemical Complex. This joint venture with TotalEnergies, which began construction in 2023 and is set for a 2027 startup, includes a 65 million ton-per-year ethylene cracker and polymer plants. The ambitious Jafurah Gas Project, valued at over $100 billion, is developing extensive gas processing facilities slated for completion between 2025 and 2027.
• Mining and metals projects are transforming the Kingdom’s industrial landscape, with significant investments driving the sector. Ma’aden’s “Phosphate 3” project in Wa’ad Al Shamal, a SAR 28 billion investment, is designed to boost phosphate fertilizer output, while international deals worth around SAR 35 billion are spurring projects in copper, zinc, and lithium production. Ras Al Khair is emerging as a mining metals hub with ongoing expansions to support a burgeoning non-oil mining industry.
• Beyond heavy industry, the development of advanced manufacturing and industrial zones is gaining momentum. Major projects include an electric vehicle (EV) manufacturing cluster with initiatives from Lucid Motors and Ceer and futuristic hubs like NEOM’s Octagon, which is set to host hydrogen, biotech, and robotics factories. These projects typically involve joint ventures and public-private partnerships, with the government offering incentives such as cheap industrial land and favorable financing to attract local and foreign investment.

Government Policies & Programs
• The National Industrial Strategy (NIS) under Vision 2030 is the cornerstone of Saudi Arabia’s industrial policy. It targets 12 key subsectors, including chemicals, metals, and machinery. More than 800 projects, valued at over SR 1 trillion, have been identified under this strategy. These projects are supported by incentive packages such as tax breaks, subsidized energy, and financing via the Saudi Industrial Development Fund (SIDF). Programs like Shareek further drive private sector participation by offering co-funding and streamlined regulatory processes.
• Complementing the NIS, the National Industrial Development and Logistics Program (NIDLP) integrates industry, mining, energy, and logistics to support cross-sector projects. This umbrella program has facilitated linking mining sites with rail networks and ensured robust power and water supply for new industrial cities. Regulatory reforms, such as the new mining law and initiatives launched at the Future Minerals Forum, have attracted significant investments and helped secure lucrative mining agreements.
• Local content requirements and Saudization policies are critical to maximizing the economic benefits of industrial projects. Aramco’s iktva program, for instance, mandates local sourcing, spurring international contractors to establish fabrication yards domestically. Additionally, sustainability initiatives under the Saudi Green Initiative and support for projects like NEOM Green Hydrogen ensure that industrial policies are aligned with long-term environmental and energy objectives.

Industry-Specific Developments
• Industrial projects in Saudi Arabia are increasingly utilizing advanced construction techniques and engineering innovations. Modular construction is widely adopted for refineries and power plants, where components are fabricated off-site and assembled on location, significantly reducing construction time and improving quality. Furthermore, cutting-edge digital tools such as 4D/5D BIM and IoT-driven project management platforms enhance coordination and efficiency on these large-scale projects.
• Technological integration is a major focus, with new facilities designed to support future operational needs. For example, mining facilities are built with provisions for autonomous operations, including advanced control rooms and networks for self-driving trucks. Projects like NEOM’s Octagon incorporate AI, robotics, and integrated R&D centers, setting the stage for future flexible and scalable production capacities.
• Sustainability practices are becoming integral to industrial construction, emphasizing waste reduction and local resource utilization. Contractors are increasingly reusing construction waste—for example, crushing concrete as a road sub-base—and co-locating utilities such as desalination and power plants to optimize resource use. Simultaneously, there is a concerted effort to localize the workforce through training programs and apprenticeship initiatives, ensuring that high international standards are met while gradually reducing reliance on foreign labor.

Saudi Arabia Infrastructure Construction
Saudi Arabia’s infrastructure construction boom offers contractors, investors, and suppliers vast opportunities. Multi-billion dollar projects in transport, aviation, utilities, and digital infrastructure provide a robust pipeline of work that is underpinned by strong government commitment. Companies that can deliver large-scale, innovative projects and effectively leverage PPPs stand to secure long-term, strategic positions in the market.However, the scale and complexity of these projects bring significant challenges in project management and supply chain coordination. Fluctuating oil prices, rising global interest rates, and potential regulatory changes add layers of risk to project execution. Firms must implement robust risk management strategies and maintain flexible operations to address these uncertainties effectively.Strategically, aligning closely with Vision 2030 and government initiatives is crucial for success. Investing in local capacity, adopting innovative construction methods, and building strategic partnerships with key public entities like PIF and NCP will provide a competitive edge. Ultimately, a technology-driven, sustainable approach and proactive risk management will enable stakeholders to navigate Saudi Arabia’s ambitious infrastructure transformation and secure long-term growth.

Macroeconomic Factors
• Saudi Arabia is channeling vast public investment into infrastructure to drive Vision 2030, with significant capital allocated for roads, rails, ports, airports, and utilities. Capital expenditures surged by 48% in 2023 compared to 2022, largely due to mega-project implementation. Billions of dollars are being earmarked for transport, underlining a strong fiscal push despite a modest projected deficit for 2022