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Saudi building programmes hit by delays and cancellations

Although 350 projects are still under construction the fact that so many projects worth $20 billion have been affected directly by the global economic slowdown is a blow, says research firm Proleads.

The report, Insights Saudi Arabia: An Investigation into the Current and Future State of the Civil Building Construction Industry, looked at more than 720 projects with a total budget of more than $430 billion across commercial, retail, education, healthcare, leisure, entertainment and residential sectors.

Although in its report it concludes that the Saudi Arabian construction market is one of the healthiest in the world. 'Saudi Arabia is one of the most active construction markets in the world as it grows its infrastructure to meet domestic demands,' the report says.

Proleads expects Saudi Arabia to maintain its present levels of construction activity into 2010. However, it predicted a slight drop in education and health sectors, although it believes this will be offset by slight growth in commercial and residential projects.

'The economic crisis has not had a great effect on the rate at which projects have been cancelled in Saudi Arabia. Our cash-flow projections show the Saudi Arabian industry will continue building from a position of strength well into 2010, whereas other Arabian Gulf markets continue to seek stability,' said Emil Rademeyer, director of Proleads Global.

Proleads recently found that in the UAE some 400 projects totalling over $300 billion had been cancelled or put on hold.

The report also found that in Saudi Arabia residential makes up the biggest share of the market in terms of value but education and healthcare has the most projects. It predicts that a significant number of current projects will be completed in 2011. Risk in the market is tightly linked to relatively few projects with 2% of projects making up 43% of the total budget.

Rademeyer said the aim of the study is to quantify the civil construction market as accurately as possible, rather than rely simply on anecdotal evidence. 'It is vital to know how fast and by how much an industry is changing, not just for the industry and its suppliers but also for planners, governments and financial institutions,' he added.