Saudi Arabia at the forefront of global construction trends -Versatile International

Saudi Arabia has become the global frontrunner in mega construction projects, with active developments valued at USD 1.5 tn, according to a Versatile International white paper (pdf). This pipeline — featuring giga-projects like Neom, Diriyah Gate, Jeddah Central, and King Salman International Airport, alongside the Kingdom’s significant infrastructure investment — is rapidly establishing Saudi Arabia as the regional benchmark in construction, Versatile Chairman and CEO Marco Fahd told Al Arabiya.

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The construction boom is driving a shift in supply chain models, with 55% of professionals in Saudi Arabia and the UAE now prioritizing regional supply chains to boost economic resilience and lower emissions. Though Saudi Arabia is increasingly using local materials like limestone for sustainability and economic independence, 48% of professionals acknowledge that complete reliance on local sources is unrealistic, affirming the ongoing necessity of international partnerships.

The major challenges: The primary challenge for regional construction is cost increases, driven by massive and complex projects, the report reads. Rework is another major factor, with 57% citing it as the main cause of cost inflation (prompting 42% of firms to allocate 5-10% of budgets to it). Significant labor shortages, which 56% of professionals anticipate will come into play over the next decade, were also highlighted in the report amid rising demand, which has made workforce development a high priority and prompted firms to explore automation and digital solutions to bridge the skills gap.

REMEMBER- Construction costs in Saudi Arabia rose between 3.4% and 4.2% in 2024, driven by material shortages, heightened labor demand, and inflation in raw materials and energy, according to a Stonehaven report. The Tender Price Index (TPI), which averaged 6.1% growth over the last four years, is projected to rise by 7.4% in 2025, driven by increasing contractor expenses related to labor and living costs.

All eyes are on AI, with 57% of professionals in Saudi Arabia and the UAE identifying AI and automation as the most significant industry trend. AI integration is already reshaping project management, with 60% of professionals using AI-powered tools to improve scheduling and resource allocation, reduce rework, and boost supply chain efficiencies. Qiddiya has been among the pioneers in the sector in adopting AI-powered project management tools and Building Information Modeling (BIM).

Looking ahead: Fahd expects further investment in AI-powered BIM and data-led oversight tools for optimized resource allocation and predictive maintenance. Modular and prefabricated construction methods are also becoming increasingly crucial, with projects like Neom spearheading their adoption for improved efficiency and sustainability.

About Versatile International: Versatile International is a project management consultancy with offices in Dubai and Riyadh, specializing in destination-scale real estate development projects. It provides services to asset developers in supply chain management, risk mitigation, and procurement.