Saudi Arabia construction activity among highest globally

Saudi Arabia construction activity among highest globally but faces massive talent shortage

Over 70% reported shortages in skilled professionals and general labour to keep up with the pace of construction, report reveals .

Saudi Arabia is leading the world in construction activity, according to the latest Global Construction Monitor from the Royal Institution of Chartered Surveyors (RICS), but this unprecedented boom is being hampered by a severe shortage of skilled and unskilled professionals.

The monitor found Saudi Arabia posting a remarkable construction activity reading of +72 percent in Q4 2023, one of the highest globally. Infrastructure and public works projects are driving this surge, with an eye-watering +82 percent activity level.

The Kingdom’s slate of “giga-projects,” like NEOM, are fueling insatiable demand for construction services and workers.

This flurry of projects is creating opportunities but also several key challenges according to industry respondents in the Q1 2024 Global Construction Monitor report. A major issue cited is labor shortages, with frequent mentions of a “shortage of skilled manpower” and difficulty “finding the right caliber of staff.” As one respondent in Dammam stated, “Major skills shortages” are impacting the sector.

Beyond just manpower gaps, some felt there were more fundamental competency issues among existing workers. “Some are not competent to do their jobs” and “many lack proper planning skills and fail to engage in Front-End Loading planning, which is essential for effective project management,” a respondent in Dammam said.

The dearth of unskilled labor is also biting, with over a third of firms struggling to hire general laborers according to the RICS monitor. Other cited challenges include rising costs, with a Riyadh respondent warning “rising cost of diesel, steel, and cement will affect unit rates.” Localisation policies requiring use of national resources were also noted as an impact by another from Riyadh.

However, the booming construction activity was also viewed as an opportunity by some. One Riyadh respondent said “the significant shift of trades from nearby GCC due to the volume of work contributes to the increase of non-oil exports of KSA.” The development of entertainment facilities was highlighted as “positively affecting improvement of the construction market.”

But 77 percent of industry professionals report shortages of workers to keep up with the pace of output growth in the RICS monitor.

With over $1.1 trillion in mega-projects planned or underway, pioneering solutions to the labour crisis will be critical for maintaining Saudi Arabia’s newfound status as the global construction capital.