< Previous| VISION 2030 | 20 VISION 2030: WHICH SECTORS ARE THE LIKELY WINNERS? With 2030 inching closer, anticipation is brewing on how the Kingdom of Saudi Arabia will achieve its ambitious goals, S&P Global’s report highlights key growth prospects for sectors | VISION 2030 | Aimed at radically restructuring the kingdom’s economy, Saudi Arabia’s Vision 2030 has been the central focus of various sectors in the country since its inception. Not only has it become imperative to take the vision’s goals into account as an entity in the kingdom, it has caught the attention of the entire world. Now, recent reports from S&P Global, a US-based provider of transparent analytical data, has revealed that key sectors of Saudi Arabia’s economy are set to benefit from investments flowing into the Vision 2030 programme. These sectors, including digital infrastructure, food and agriculture, healthcare, and utilities will see significant spending growth over the medium and long term. According to S&P, funding will also most likely come largely from the debt capital markets. In an attempt to understand how each sector will help the kingdom achieve its Vision 2030 goals, S&P Global assessed and analysed companies in the country including their ability to take a “disciplined approach to project selection, to focus on returns and not only on volumes, and to adapt its risk management frameworks as the business grows.” After an in-depth analysis, S&P Global narrowed down how each sector will contribute to the overarching end goal, eight years from now. Real Estate According to the report, sustained property market growth is expected in Saudi Arabia will bene t from key sectors.| VISION 2030 | 21 | VISION 2030 | Saudi Arabia, fuelled by Vision 2030, with $1 trillion slated for real estate and infrastructure projects. At least eight new cities are planned, predominantly along the coast of the Red Sea, with more than 1.3 million new homes by end-2030. Numerous projects are also slated for existing main cities. With the ambitious target for Riyadh to become one of the 10 largest cities in the world, its population is projected to exceed 15 million by 2030 from around eight million (2018 estimates). This will support demand for residential properties over the longer term, with growing interest in lifestyle- oriented developments and smaller and more affordable units driven by the expanding expat population and changing preferences. Moreover, the office real estate market has also been boosted by the Regional Headquarters (RHQ) program, supported by business growth initiatives related to Vision 2030. Growing demand for office space has been supported by the post-Covid recovery and government-led economic stimulus. The surge in office leases is being driven by demand from abroad; the Ministry of Investment reported 9,400 new licenses issued to foreign companies in Q1 2022, about 19 times the previous year. During the first-half 2022 the market saw a rise in apartment prices in Jeddah, Dammam, and Riyadh, as new deliveries were absorbed by unmet demand. The increase in rental prices was fueled by the booming labour market. Saudi Arabia’s construction sector is fuelled by Vision 2030. [Images: Shutterstock]| VISION 2030 | 22 The main fact here, however, is that about $3.5 billion to $$.3 billion is set to be invested in retail property in 2022 to 2023. S&P Global said that this should increase the total Gross Living Area (GLA) by about 20%. Tourism Tourism is one of the key focuses of Vision 2030 and a main non-oil growth driver, providing investment opportunities for private local or international investors. Saudi Arabia aims to attract 100 million visitors per year by 2030, of which about a half to Riyadh, and including 30 million religious visitors (from eight million currently). The country’s modernisation efforts and investments in mega projects for tourism and entertainment - NEOM, Red Sea Project, Qiddiya - will attract more international visitors. Hosting major events such as the Asian Winter Games in 2029 in NEOM TROJENA should also boost numbers. As reported by S&P, the development of utilities, transportation, and social infrastructure in cities will, in aggregate, require investments in excess of $500 billion. It said: “We believe that these projects - alongside measures that free up competition, foreign ownership, and long-term residency - will attract people to Saudi Arabia and ultimately benefit the country via higher foreign direct investment.” In addition, the Saudi Arabian government also aims to attract private investors to fund tourism developments. The kingdom established a Tourism Development Fund in 2020 with $4 billion in capital, with a mandate to facilitate private investors’ access to investment opportunities by providing funding to projects. “Hospitality infrastructure will be mostly funded by local and foreign private investors, with plans to add 500,000 hotel rooms by 2030 (around 62,000 branded hotels keys currently), the bulk of which will be in the mega projects,” S&P said. Tourism is one of the key focuses of Vision 2030 and a main non-oil growth driver.| VISION 2030 | 23 Saudi Arabia aims to garner interest from top global hotel brands to help achieve its ambitious tourism targets. For instance, the recently announced Hilton expansion will see the hotel brand grow from fifth to being the country’s second largest brand. Moreover, material investments in the transport segment will also create infrastructure to enhance travel, with proceeds from both public and private funds. According to S&P Global, the kingdom intends to develop railroads, expand existing airports, and launch a new airline (Riyadh International Airlines [RIA] scheduled for end- 2022) that will complement existing carriers Saudia, flynas, and flyadeal. Health care Under Vision 2030, the government plans to invest over $65 billion to develop health care infrastructure, committing to 88% of the population being covered by inclusive health services by 2025. More importantly, the Ministry of Health is ceasing to be a service provider and will focus instead on regulatory matters and funding quality care through contractual agreements with health clusters. “The private sector will assume a greater role in filling the demand- supply gap, with the government aiming to increase the sector’s contribution to 65% by 2030 from 40% currently. This includes the privatisation of some of its hospitals,” the report said. Similarly, the growing population and increasing insurance coverage requirements are fueling strong demand for specialty clinics and ambulatory care centers. Saudi Arabia accounts for 60% of the GCC’s health care expenditure and we expect the sector to remain a top priority for the government. The population is expected to grow to 39.3 million by 2030, from 33.4 million in 2018, with an estimated additional 20,000 hospital beds needed by 2030, from 77,224 beds as of end-2021. S&P commented: “Vision 2030 and production localisation should support steady growth in other healthcare subsectors.” Utilities and infrastructure Utilities face the major task of reducing Saudi Arabia’s fossil fuel dependency and meeting 70% of energy needs from renewables by 2030. By 2030, Saudi Arabia targets to generate half its power via green assets and the other half from gas. Today, half of the country’s electricity comes from gas-generating assets while the other half is from petroleum-derived liquids. Previously, Saudi Arabia has implemented sweeping plans to move away from oil and gas for power generation by rapidly deploying renewables in the grid; more recently it dismantled old oil-fired assets that had become inefficient. ACWA Power, the largest power and water developer in the region alongside PIF, has signed for nearly 42 gigawatts of renewable power plants worth $30 billion. This program will meet 70% of the country’s renewables target by 2030, reported S&P Global. In summary, the significant project announcements across multiple corporate sectors is a clear product of the kingdom’s exponential economic growth. Looking at the Vision 2030 goal in the distance, it is safe to say that the country can expect to see major changes to its economy in the next eight years. Saudi Arabia aims to attract 100 million visitors per year by 2030.| CONSTRUCTION WEEK KSA AWARDS 2022 | 24| CONSTRUCTION WEEK AWARDS KSA 2022 | 25 On 9 November 2022, the Construction Week Middle East KSA Awards gathered industry leaders in an evening celebration of the kingdom’s growth and ongoing transformation, recognising the achievements of the people and companies that are building Vision 2030 into a reality, showcasing extraordinary work in the past 12 months as they bring mega and gigaprojects to life in the Kingdom of Saudi Arabia. | CONSTRUCTION WEEK KSA AWARDS 2022 | 26 The King Salman Energy Park (SPARK), an industrial hub by Saudi Aramco has been crowned the Sustainable Initiative of the Year amongst a highly- competitive list of candidates in CW KSA Award’s 2022 edition. The SPARK won the award for contributing to the advancement of environmental considerations in construction, and for demonstrating clear, practical applications. SPARK is the first industrial city in the world to obtain a LEED Silver Certification, and the development has been ensuring sustainability through the numerous green construction techniques used to build smart cities. SPARK also secured the Gold Rating by the Ministry of Housing’s green building rating system, called Mostadam, in the category of Communities/ Design Stage. At the Construction Week Middle East KSA Awards, the Sustainability Initiative of the Year accolade went to the company – operating in the construction sector – that delivered the best sustainability initiative in the Kingdom of Saudi Arabia. The winning initiative will have contributed to the advancement of environmental considerations in construction and demonstrated clear practical applications. SUSTAINABILITY INITIATIVE OF THE YEAR WINNER: KING SALMAN ENERGY PARK (SPARK) PROJECTS - SAUDI ARAMCO| CONSTRUCTION WEEK AWARDS KSA 2022 | 27 Health and safety is crucial to the success of the construction industry, and in the past 24 months, has been a massive talking point for the sector. The award was scooped up by Diriyah Gate Development Authority (DGDA) for its Occupational Health & Safety System. The Saudi-based developer demonstrated a “highly effective” programme that took a cumulative approach in safeguarding the health and safety of its workers. The initiative won the award for contributing to the advancement of health and safety consciousness across all levels of the organisation. The highly commended award went to Saudi Aramco for its Project Control Center at SPARK Dryport Project. The nominees this year come from companies including ROSHN Real Estate Company, Diriyah Gate Development Authority (DGDA), Red Sea Global, and Saudi Aramco. HIGHLY COMMENDED Project Control Center, SPARK Dryport Project - Saudi Aramco HEALTH & SAFETY INITIATIVE OF THE YEAR WINNER: OCCUPATIONAL HEALTH & SAFETY SYSTEM - DIRIYAH GATE DEVELOPMENT AUTHORITY (DGDA)| CONSTRUCTION WEEK KSA AWARDS 2022 | 28 The C on s t r uc t ion We ek KSAAward for the Hospitality Project of the Year was won by AECOM for its The Habitas Resort project in AlUla. The resort earned the title after competing with a long list of candidates in the region. The winning project epitomises sustainabilit y and g reen practices through this project. The 100-key hotel was sustainable during its construction and continues to be in operation. This category is open to any hospitality or tourism-related project that has been completed during the eligibility time period. The project won the award for demonst rat ing const r uct ion best practice, for maintaining an exemplary health, safety, and environment (HSE) record, for meeting client requirements, and for delivering the project on time and within budget. The shortlisted projects in this category also included the Southern Dunes Hotel by Red Sea Global. HOSPITALITY PROJECT OF THE YEAR WINNER: THE HABITAS RESORT, ALULA – AECOM| CONSTRUCTION WEEK AWARDS KSA 2022 | 29 The nominees for this category included SACO MAKKAH Fla g sh ip Store Fit- O ut by A M AQ Cont r ac t i ng Company; Social Development Bank Headquarters by FA CONSULTANTS; and AMAAD Business Park by Alkifah Contracting Company The award for the highly commended was given to the Social Development Bank Headquarters by FA CONSULTANTS. The Commercial Project of the Year was taken home by AMAAD Business Park by Alkifah Contracting Company. The park stood out for fast tracking ahead of the original schedule. The sheer size of the project and its strategic location in Dhahran made it the talk of the town even prior to its completion. Every year, the award goes to the project that makes an important contribution to its surroundings, demonstrates construction best practice, and uses construction techniques for project success. HIGHLY COMMENDED Social Development Bank Headquarters - FA CONSULTANTS COMMERCIAL PROJECT OF THE YEAR WINNER: AMAAD BUSINESS PARK – ALKIFAH CONTRACTING COMPANYNext >