Saudi Arabia's massive infastructure drive

It was recently announced by the director-general of the Saudi Industrial Property Authority (MODON), Tawfig Fawzan Alrabiah, that a new industrial city would be built in Taif in order to cope with growing demand for industrial land in Saudi Arabia. The Taif Industrial City will in fact be a ‘city within a city’ so to speak, but will measure 11 square miles in size and will function as a fully-fledged industrial city, providing all the infrastructure required in such zones.

In the first phase of the project, Alrabiah revealed to Saudi Arabia news media that 11 million square meters of land would be developed and would be supported by main artery roads and secondary link roads to provide ease of access to the national road network for the heavy goods trucks that frequent industrial areas of this kind.

The development comes on the back of soaring demand in the industrial sector, in 2008 500 industrial plots of land were allocated by the government, this increased to 800 plots allocated in 2009 and in 2010 it is expected that demand will require 1000 additional plots to be zoned for use by heavy industry. The last two years in Saudi Arabia have seen unprecedented economic growth, which has been fuelled in part by the increasing demand for industrial land, leading to the establishment of 18 industrial cities in the country.

In the last two years alone, five new industrial cities have been built or are in the development pipeline, according to Saudi Arabia news reports. A total of $53 billion has been spent by MODON on the construction of Industrial Cities for far, which act as hubs of investment and commercial activity for a specially targeted industry. Over 300,000 jobs have been created thus far, which is part of the government’s wider long-term development plans that include the provision of industrial space, as well as the building of schools, houses, hospitals and roads to improve the overall infrastructure of the country.

Saudi Arabia news media recently reported that the country’s ninth Five-Year Development Plan (FDP) had been approved by the Council of Ministers and will see over 1 million houses built across the country, along with 25 technology colleges, 28 technical institutes and 50 industrial training centers in the education sector and 117 hospitals, 750 primary health care centers and 400 emergency centers in the medical sector.  These two primary features of the plan amount to $195 billion and $73 billion respectively.

In total the latest five year plan, which is valid until 2014, will see $385 billion spent on infrastructure that includes $29.6 billion for the transport and communication sectors and $26.8 billion for new housing and the improvement of municipal services.

The construction industry in the country has been provided with a major boost on the back of such plans, which have already seen massive payouts made by the government as part of the long-term development plans.

“Around $200bn worth of projects have been issued this year and many are under construction. These projects go to major contractors but they subcontract to smaller players, so the work gets spread around the sector,” said Mu’taz Sawwaf, chief executive of Construction Products Holding Company (CPC). CPC is one of the largest companies operating in the Saudi construction industry and has been awarded many major projects as part of the FDP.

The construction sector and related industries therefore look set to benefit handsomely from the Kingdom’s development drive, while major changes seem to be afoot for infrastructure in the Kingdom in general.