Neom tenders re-energise Saudi construction sector, says report
RIYADH, September 1, 2021
Saudi Arabia’s masterplan Neom megaproject is steadily progressing from the drawing board. After five years of spending cuts, the growing momentum of tender issuances from Neom is good news for contractors.
The hope is that these tenders will swiftly translate into awards that can rejuvenate the contracting sector’s financial health, as well as restore confidence in the Saudi construction sector, according to GlobalData’s MEED.
The US group Aecom was appointed project management consultant for the Neom Bay development in 2019, months after Riyadh approved the establishment of Neom as a joint-stock company, wholly-owned by the Public Investment Fund, to develop the project.
Since 2019, around $1.43 billion worth of contracts have been awarded for construction and transport projects at Neom, it stated.
According to the report, the tendering activity for residential projects had gathered pace in recent weeks.
Two tenders for one- and two-bedroom homes were issued as part of Neom’s Community Expansion 3 programme, as was a separate tender for 25 homes at Neom Zero, stated the GlobalData.
Contractors are understood to have expressed interest for a public private partnership (PPP) package for a housing project at the 120-km Gulf of Aqaba scheme earlier this month, and a PPP accommodation tender planned for Neom Mountain is also advancing, it added.
Richard Thompson, Editorial Director of GlobalData’s MEED, said: "In the three years preceding its launch, low oil prices had caused payment delays, with new construction projects in the kingdom grinding to a halt."
"The ensuing cash flow crisis engulfed even Saudi Binladin Group and Saudi Oger, two of the kingdom’s largest contractors at the time," noted Thompson.
"Riyadh has since consolidated the construction sector through facilitating pending contractor payments, reining in the local market’s pre-oil crash appetite for fast-track schemes, and launching legislation to govern employment and tendering activities in the sector," he added.
Vision 2030-related construction projects such as Neom are expected to benefit from these measures.
Thompson pointed out that around $667 million of these contracts are linked to the construction of commercial, industrial and office buildings across the Neom site, while a $160 million order is assigned to road and infrastructure development at Sindalah Island.
Contracts worth $1.3 billion are at the tender stage, he added.
Neom recently received expressions of interest for a mobility hub planned for its base camp. The tender is said to cover spaces for electric mobility administration and infrastructure, electric vertical take-off, and landing hangars and drone transport.
The Line, the 170km car- and road-free belt of hyperconnected cities launched by Crown Prince Mohammed bin Salman this January, has also driven progress on infrastructure schemes within Neom.
Firms have been invited to bid by December 30 for the contract to build 31 km of tunnels that form part of The Line’s infrastructure backbone.
In June, China Railway Construction Corporation was selected for the adits and portals package, comprising the openings and access points for the tunnels.-TradeArabia News Service
