Saudi snapped up 32.7% of the Middle East and Africa’s (Mea) awarded construction contracts in 2024, amounting to USD 29.5 bn, according to JLL’s latest Middle East and Africa Market Review and Outlook report (pdf), citing MEED Projects. The Kingdom came second only to the UAE at USD 40.6 bn.

The breakdown: The share was driven by a strong performance in the residential sector (USD 7.9 bn), followed by hospitality and large-scale infrastructure projects. The Kingdom experienced a moderate increase in construction despite rising construction costs across the region amid expectations of a stable demand in anticipation of major upcoming events.

We’re leading in the pipeline: The report put the Kingdom first in terms of upcoming construction projects, accounting for 45.6% of projects in the pipeline.

Lower interest rates and stabilizing commodity prices may improve market conditions this year, JLL said. The annual tender price inflation (TPI) for the Kingdom remained stable at an average 6% in 2024, with the report expecting it to remain within a 2% fluctuation in 2025. However, demand pressures from gigaprojects may offset benefits.

REGIONALLY- Total construction contract awards across the Mea region fell 20.2% y-o-y in 2024 to USD 90 bn. The UAE led comfortably with 45% of awarded contracts, followed by Saudi Arabia, while Egypt and South Africa accounted for 6.8% and 4%, respectively.

OUTLOOK-

The Mea region construction market is supported by a robust USD 1.9 tn project pipeline, according to Meed Projects and StatsSA. Lower interest rates and stabilizing commodity prices are expected to encourage investment in 2025, with developers focusing on high-quality, institutional-grade assets, JLL noted.

Our real estate sector projections in 2025:

  • Residential: Riyadh is expected to add 28.9k units, while Jeddah will add 11.8k units and Dammam Metropolitan Area will add 6.6k units, with demand putting pressure on supply and rent rates;
  • Hospitality: Riyadh will add 2.3k hotel keys, while Jeddah is to add 3.5k, and Dammam 644;
  • Offices: Riyadh is set to open 888.6k sqm in office space, while Jeddah, and Dammam are expected to open 72.6k sqm and 175k sqm, respectively;
  • Retail: Riyadh will add 283.1k sqm in retail space, while Jeddah is set to add 637.8k sqm, and Dammam is to add 115.3k sqm.

LOOKING AHEAD- In 2025, limited cross-sectoral supply is projected to drive construction market performance, while infrastructure projects will drive development and boost private sector participation across the region. Alternative assets, like last-mile logistics and data centers, are emerging as a core facet of real estate developments.

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