Saudi Arabia construction mission - 12-16 February 2010

Driving at night from Riyadh airport into the city, a spectacular array of lights and activity appears quite soon on the right. This is the immense construction site of Princess Noura University, with no less than 84 tower cranes, and is perhaps the the most immediately visible sign of Saudi Arabia’s huge investment into its infrastructure. During the 4 long working days I spent this week with a construction delegation in Riyadh and Jeddah, it became abundantly clear that the public sector is the driving force behind the continuing growth of the economy here. The statistics are fairly stark; with more than 50% of the population under 20 years old, there is huge pressure to create jobs and all the associated needs of a modern fast-growing population. Universities, schools, hospitals, public transport, power, and new cities are all being pushed forward by the Saudi authorities and these requirements can only get more urgent.

The results are starting to show through now and capacity being built up, so that projects which were in the planning stage when we were here last April are now under construction. Even though the timeframes are very long (some of the Cities will take 25-30 years to develop fully) and there is a certain amount of caution in the air because of the global economic situation, it was clear that all the developers we met were still extremely busy and looking for help. Although the problems in Dubai have started to ripple across the region, affecting almost all the Gulf real estate markets, this has had little effect in Saudi, as most of its major construction was around the industrial and infrastructure sectors anyway, rather than large-scale private sector developments.

The mission had a hectic 4 days, visiting some big consultants like CCC, Dar al-Riyadh, El-Seif, Saud Consult and Bin Laden group, as well as key public sector authorities like al-Modon who are developing more than 20 new industrial cities, and the Riyadh Development Authority. We also visited two of the Economic Cities planning offices. The planning stage at Knowledge Economic City on the outskirts of Medina is now almost complete with the infrastructure construction starting in Q2 this year, and the concept of the KEC seems well thought through. The Jazan Economic City down near the Yemeni border has now secured serious investment in its huge industrial projects with construction well underway. Although this is developed by Bin Laden in co-operation with a Malaysian company, help is going to be required in many disciplines, with UK companies already active on the project. We can expect both of these cities to yield big opportunities for UK companies in the years and decades to come. The King Abdullah Economic City is focusing on developing the Port for now, with an expected completion date in late 2011, and we can expect a real drive to move this immense project forward from then on.

One common theme has been that UK companies have serious competition here, despite the massive volume of work. For example the Chinese President visited Saudi in February 2009 bringing 280 (!) companies with him. According to one contact we spoke to here, Chinese companies have won 600 projects since that visit, supported financially by the Chinese government and with a favourable visa regime. It is tough competition, and although UK firms remain widely respected for their quality and level of expertise, there are going to be no easy wins. Many of my delegates are staying on extra days or coming back to the Kingdom soon to follow up leads. But the rewards seem infinitely more obvious than much of the rest of the Gulf, as simply in terms of population needs Saudi just needs so much more.

This is the second visit I have made to Saudi Arabia with a construction delegation, following a mission last April. It is always a bit strange starting a mission on a Saturday. Sometimes you feel you are missing something – like the weekend! – but it can lead to some interesting discussions on sport interspersed with all the business. Receiving text updates on Southampton vs Portsmouth only caused a temporary distraction at CCC, and my delegates were – I think - pleased that the 6 Nations finished just before the first guests arrived at the evening reception. That reception was superbly organized by UKTI and the quality of the attendees was outstanding. And it was a good group of delegates who got on well and made excellent and credible presentations to the Saudi companies.

I have picked up a lot of useful information and contacts on this trip. I will be debriefing British Expertise members at our Gulf event next Wednesday morning 24 February. I look forward to seeing some of you there.

Dominic James
Jeddah Airport
17 February 2010