ECONOMIC OVERVIEW
Driven by Vision 2030
Driven by Vision 2030, a focus on diversification, continuous demand for residential, commercial, and infrastructure development owing to population growth, and substantial investments in giga-projects, the Kingdom of Saudi Arabia’s (KSA) construction market is experiencing significant growth.
The Kingdom currently has an extensive US$ 1.7 tn pipeline of mega and giga projects.
The economy continues to show resilience. In Q4 2024, real GDP rose by 1.5% year-on-year, supported by a strong 4.3% increase in non-oil activities (GASTAT). Quarterly growth reached 4.5% compared to the same period in 2023, reflecting broad-based momentum across sectors. Looking ahead, The International Monetary Fund (IMF) projects a 3.3% expansion in 2025, positioning KSA as the world’s second fastest-growing economy after India, highlighting sustained confidence in the Kingdom’s economic trajectory.
Inflation was consistent throughout 2024, with minimal fluctuations. Headline inflation dropped from 3.4 percent at its peak in January 2023 to 1.7 percent in September 2024. Inflation then increased to 1.9 percent in October 2024, and again to 2.0 percent in November of the same year (reuters.com). This increase in inflation is primarily attributed to higher global commodity prices and supply chain disruptions, which have impacted the cost of essential goods. Housing and utility costs also saw a rise – rent climbing by 11.6 percent.
"Vision 2030 remains the driving force behind diversification, with massive investments in mega projects continuing to bolster non-oil sectors."
Kobus Havemann
Director, Country Manager KSA
Sector perfomance
While the oil and gas sector remains a significant driver, accounting for 41 percent of all contract awards in the first half of 2024 (US-Saudi Business Council) KSA's real estate and infrastructure investments are steadily growing to meet Vision 2030 targets.) KSA's real estate and infrastructure investments are steadily growing to meet Vision 2030 targets.
Sector performance 2025
1st
Major mixed-use development
2nd
Sports, leisure and hospitality
3rd
Industrial, manufacturing and distribution
This year, the top-performing sectors include major mixed-use developments, sports, leisure and hospitality, and industrial, manufacturing and distribution, all of which are directly aligned with national ambitions for economic diversification and urban transformation.
Mixed-use developments, such as the King Abdullah Financial District (KAFD), are increasingly popular as they integrate residential, commercial, and retail spaces, supporting the Kingdom’s broader urbanisation goals.
The sports, leisure and hospitality sector is also gaining traction, particularly as tourism becomes a central pillar of economic diversification. Nearly US$1 trillion is invested in landmark destinations such as Diriyah and the Red Sea, supporting the national target of 150 million tourists by 2030 and generating 1.6 million jobs. Public-private partnerships, a renewed focus on cultural heritage and entertainment, and a growing emphasis on sustainability are all contributing to the maturity of this sector.
The industrial and logistics markets continue to show strong demand, with warehouse occupancy reaching 98 percent in Riyadh and 97 percent in Jeddah, according to Knight Frank’s April 2025 report. This growth is largely driven by the rapid expansion of the e-commerce sector, which is projected to reach a market value of SAR 100 billion by 2029. The National Industrial Development and Logistics Programme (NIDLP) is also catalysing growth in advanced manufacturing and logistics, with strategic investments in King Abdullah Economic City (KAEC) and the Jubail and Yanbu industrial cities. The industrial services market alone is projected to reach US$54 billion by 2026, growing at a compound annual growth rate of 5.1 percent.projected to reach US$54 billion by 2026, growing at a compound annual growth rate of 5.1 percent.
Meanwhile, national housing initiatives such as Sakani are playing a key role in achieving KSA’s goal of 70 percent homeownership by 2030. The programme has already supported more than 1.2 million families, highlighting its importance in the Kingdom’s social development agenda.
Mining is also gaining strategic momentum as a core pillar of diversification. KSA holds an estimated US$2.5 trillion in untapped mineral resources, including lithium, copper and gold. A joint venture between Aramco and Ma’aden is spearheading exploration efforts, particularly for battery-grade lithium. Recent regulatory reforms, such as the Mining Investment Law and new initiatives like ESNAD, aim to attract US$32 billion in private investment by 2030, further accelerating industrial growth and foreign interest.
Finally, KSA’s digital economy is expanding at pace. Data centre capacity is projected to reach 1.19 GW by 2030, representing a compound annual growth rate of 21.87 percent. Colocation revenue alone is forecast to reach US$418.5 million this year. The Kingdom is positioning itself as a sovereign digital host through initiatives such as the Global AI Hub Law. At LEAP 2025, over US$14.9 billion in AI and cloud investments were announced. The launch of HUMAIN, a PIF-owned artificial intelligence company, and Microsoft’s Data Centre Skills Academy reflect a strong push to build national digital capability, infrastructure and talent.
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