The global real estate market is warming up, with large-scale projects in Saudi Arabia driving a construction boom.
Global consulting firm Turner & Townsend emphasized in its latest report that the 2030 Expo and the 2034 FIFA World Cup to be held in Saudi Arabia will further boost the country’s construction industry, as such international events typically require extensive venue construction.
Additionally, a report released earlier this month by real estate services company JLL highlighted that Saudi Arabia led the global construction industry in the first quarter of this year, with ongoing construction projects valued at up to $1.5 trillion.
Mark Hamill, Director and Head of Middle East Real Estate and Major Projects at Turner & Townsend, noted that the rapid development of Saudi Arabia’s construction sector is impressive. Major projects such as The Line, King Salman Park, and Diriyah Gate have significantly contributed to the industry’s growth.
The Line, part of the NEOM project, is a $500 billion linear smart city stretching nearly 170 kilometers long, only 200 meters wide, with buildings over 500 meters high, designed to accommodate around 9 million residents.
King Salman Park, under development in Riyadh, spans 4,102 acres and is set to become the world’s largest urban park. Construction began in 2021, with completion expected by 2024.
The Diriyah Gate project, one of Saudi Arabia’s five major national projects, is expected to be completed by 2025. It aims to become a significant historical and cultural tourism hub, bolstering the local economy and cultural tourism.
The report also noted that Saudi Arabia ranks 19th globally in construction costs. While the construction cost growth rate in Riyadh has fallen from a high of 7.0% in 2023, it is still expected to remain high at 5.0% this year.
The report highlighted Saudi Arabia’s regional headquarters initiative launched last year, which encourages companies to set up offices in the country. It noted that the average cost of high-rise office space in Riyadh’s central business district is relatively low at $2,266 per square meter, offering a cost advantage.
Regarding current challenges, the report pointed out that Saudi Arabia faces a shortage of skilled labor, which is crucial for the timely execution and completion of construction activities.
**Global Outlook**
The report indicated that global construction inventories are expected to increase this year, but talent shortages remain a major issue.
Neil Bullen, Managing Director of Global Real Estate at Turner & Townsend, stated, “The global real estate market is emerging from a difficult period filled with inflationary pressures, volatility, and disruption. Our industry has proven resilient, focusing on new procurement and supply chain development methods to improve efficiency and productivity, bringing new opportunities to many markets.”
The report also emphasized that introducing technology in the construction industry can help overcome various challenges.
Bullen added, “The acceleration of digitization brings enormous opportunities, but it requires us to meet the demand for skilled labor. Continued shortages may limit potential growth.”
