Mega projects fail to lift construction sector gloom

Construction work has dropped 30 percent this year compared to last year’s figures due to a rise in the prices of building material and a shortage in manpower, Saudi contractors told local media.
They indicated that the contracting sector is facing a crisis categorized by a labor shortage and increase in the prices of construction provisions.
Abdel Aziz Al-Hanafi, an engineer and former chairman of the contractors committee at the Jeddah Chamber of Commerce and Industry (JCCI), said the sector is experiencing an unprecedented state of recession, which stands at 30 percent compared to the 20 percent figure registered last year.
The former chairman explained that while the government has commissioned mega projects, the residential construction sector is in the grip of a recession.
He pointed out that the main problem facing contractors is the absence of statistics on the needs of the market.
“There are no clear-cut estimates of the number of housing units the market needs, not even the volume of material needed to implement projects,” Al-Hanafi stressed.
For his part, Abdullah Al-Maglouth, member of the national committee for contractors, said that the majority of contractors are unqualified and most of them are foreigners.
“With the new labor laws, expatriate contractors have become reluctant to work in this sector,” he said.
The legalization period carried out by the Ministry of Labor has negatively affected the development of the construction market, he added.
Meanwhile, a recent study released by the Committee of Contractors at the Council of Saudi Chambers of Commerce and Industry showed that there were nearly 200,000 Saudi workers in the construction sector.
The growth rate in the contracting sector reached 16.5 percent in 2012 and its share of the gross domestic product (GDP) stood at 4.6 percent.