Saudi Transportation Industry on the rise

Saudi Arabia’s Vision 2030 and significant investment in housing and infrastructure development have revitalised the transportation construction industry and generated interest in a growing number of international players. The economy is more diversified than in other GCC countries, and strong government initiatives to invest in major construction projects are driving the sector, with private contractors benefiting from expansion and construction projects.

Major projects such as the Red Sea International Airport and Railway Tunnel are instrumental in growing the economy, creating a huge demand for transportation construction companies. The market is expected to grow at a CAGR of over 5% during the forecast period. Despite the COVID-19 pandemic, which had a meager impact on the Saudi Arabia construction sector in 2020, the transportation infrastructure construction market was not affected, as continuous investments were implemented by the Saudi Arabian government.

The Saudi government is actively looking into reforming the governance structures and regulations and moving towards market liberalization and private-sector participation. The government is planning to become more open to issuing licenses for full-fledged foreign transportation infrastructure construction businesses. The market in Saudi Arabia is fiercely competitive and fragmented, with many international and domestic companies. International companies are partnering with local players to form joint ventures, providing an opportunity for local players to exploit the global network of international companies.

The rapid growth of continuing urbanization is a major driver of transportation infrastructure investment. The world population reached 34.8 million in 2020, with the urban population accounting for 84% and expected to reach 92% by 2035. As the share of the urban population grows, the growth of transport infrastructure is required to connect them in the urban areas in Saudi Arabia. Companies could use the latest and emerging technology to improve public services such as mobility and well-being, interact more effectively with people, boost productivity, and solve environmental and sustainability issues.

The Saudi government’s Economic Vision 2030 plan aims to achieve the 2030 target for women’s participation in the workforce, and the assets of the Public Investment Fund have grown significantly, while the contribution of SMEs to the GDP has increased. The transportation construction market is set to play a vital role in achieving the Vision 2030 targets.