Experts confident of Saudi construction sector returning to normal soon

Figures in the USSBC report revealed that the majority of the awarded contracts during Q3 were in the transportation, power, and real estate sectors. (SPA)
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Updated 08 December 2020
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Experts confident of Saudi construction sector returning to normal soon

  • Coronavirus causes slump in contracts but recovery predicted

JEDDAH: The total value of construction contracts awarded in Saudi Arabia during the third quarter (Q3) of this year collapsed by 84 percent on figures for the same period in 2019 as the economic impact of the coronavirus disease (COVID-19) pandemic continued to bite.

Despite the large drop, industry experts remained upbeat, pointing out that the Q3 figure was a statistical anomaly, as 2019 was a record year, and predicting that once the short-term impact of the global health crisis had passed the construction sector would bounce back.

According to the latest Contract Awards Index (CAI) produced by the US-Saudi Business Council (USSBC), the total value of construction contracts awarded in the Kingdom during July, August, and September declined by SR40.4 billion ($10.8 billion) to SR7.4 billion.

Within the quarter itself, the figure also gradually declined, going from SR2.958 billion in July to SR2.613 billion in August, and SR1,842 billion in September. One of the main reasons for the slump was budgetary constraints, as the Ministry of Finance looked to absorb the economic impact of the pandemic and reined in capital expenditure.

Looking back on the year as a whole, the data compiled by the USSBC found that during the first three quarters of 2019 construction contracts worth a total of SR161.8 billion were handed out. By comparison, during the same period this year the figure fell to SR63.6 billion, a drop of 60.69 percent.

Albara’a Alwazir, economist and author of the USSBC report, told Arab News that he was confident the sector would rebound, just as it had done after the downturn between 2016 and 2018.

“The Kingdom was pursuing a market share leadership strategy as an oil producer in 2016 whereby oil prices decreased as a result of high global oil inventories. 

The slowdown in global demand for oil led to the reduction in the Kingdom’s budgetary spending, with a particular slowdown in capital expenditures,” he said.

He pointed out that the current downturn was somewhat similar in that lower oil revenues necessitated a revaluation of the Kingdom’s expenditures in the face of reduced global oil demand, but the long-term impact would be minimal, as the sector returned to normal after the COVID-19 slowdown. 

“The Saudi economic outlook appears promising as the number of COVID-19 cases have sharply decreased coupled with the recent news that vaccines are showing promising results and are reported to be available by the middle of 2021.

“Furthermore, while numerous projects have been delayed because of the pandemic, the government has stated that there will be a continued focus on megaprojects especially those that relate to Vision 2030,” he added.

Alwazir was also optimistic that decisive government actions would also mean the long-term impact had been reduced. “The recent announcement that the Public Investment Fund (PIF) will inject SR150 billion annually into the economy in 2021 and 2022 is a positive development.

“The PIF’s role in keeping the economy buoyant in the face of a global downturn will be pivotal in progressing through Vision 2030’s mandates,” he said.

Taimur Khan, an associate partner at real estate consultancy Knight Frank, noted that the dramatic year-on-year drop in Q3 was mainly down to statistics and the fact that the figures were being compared to a record-breaking 2019.

The PIF’s role in keeping the economy buoyant in the face of a global downturn will be pivotal in progressing through Vision 2030’s mandates.

Albara’a Alwazir, Economist

“It is important to note that the total value of contracts awarded in 2019 was the highest level since 2015 and 95.4 percent higher than total awards in 2018, so we are comparing against a high base,” he said.

“Whilst the total value of new contracts has decreased, the level of activity underway in Saudi Arabia still remains high compared to previous years and considering new financing agreements signed during the course of 2020, particularly those relating to urban and real estate development, we expect new contracts activity levels to begin to return to pre-pandemic highs in 2021,” he added.

Figures in the USSBC report revealed that the majority of the awarded contracts during Q3 were in the transportation, power, and real estate sectors, which jointly accounted for 59 percent of the total. The transportation sector registered the highest value of contract awards with SR1.7 billion to three major road development projects linked to the Red Sea Development, Qiddiya, and Amaala megaprojects.

The largest Q3 contract was for SR938 million, awarded by the Red Sea Development Co. to Almabani, and Nesma and Partners for the construction of a 3.7-km runway and taxiways at the Red Sea International Airport. In terms of geography, the Eastern Province continued to be the focus for activity, accounting for SR2.3 billion worth of deals, or 32 percent of all contracts awarded, including a new chlorine derivatives plant and an industrial wastewater processing plant in Jubail.

Makkah Province accounted for 20 percent of contracts, primarily in the power and real estate sectors, followed by Tabuk province with 19 percent.

According to Alwazir, the Saudi Contractors Authority has maintained that the government’s megaprojects related to Vision 2030 would continue to be its focal point in the near-term, with investments continuing into these strategically important areas.


Saudi Arabia looks to Swiss-led geospatial AI breakthroughs

Updated 12 December 2025
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Saudi Arabia looks to Swiss-led geospatial AI breakthroughs

  • IBM’s Zurich lab is shaping tools policymakers could use to protect ecosystems

ZURICH: For Gulf countries such as Saudi Arabia, AI-powered Earth observation is quickly becoming indispensable for anticipating climate risks, modeling extreme weather and protecting critical national infrastructure. 

That reality was on display inside IBM’s research lab in Zurich, where scientists are advancing geospatial AI and quantum technologies designed to help countries navigate a decade of accelerating environmental volatility.

The Zurich facility — one of IBM’s most sophisticated hubs for climate modeling, satellite analytics and quantum computing — provides a rare look into the scientific foundations shaping how nations interpret satellite imagery, track environmental change and construct long-term resilience strategies. 

Entrance to IBM Research Europe in Zurich (left); inside IBM’s hardware development lab, (top, right); and IBM’s Diamondback system. (AN Photos by Waad Hussain)

For Saudi Arabia, where climate adaptation, space technologies and data-driven policy align closely with Vision 2030 ambitions, the lessons emerging from this work resonate with growing urgency.

At the heart of the lab’s research is a shift in how satellite data is understood. While traditional space programs focused largely on engineering spacecraft and amassing imagery, researchers say the future lies in extracting meaning from those massive datasets. 

As Juan Bernabe-Moreno, director of IBM Research Europe for Ireland and the UK, notes, satellites ultimately “are gathering data,” but real impact only emerges when institutions can “make sense of that data” using geospatial foundation models.

r. Juan Bernabe Moreno, Director of IBM Research Europe for Ireland and the UK/(AN Photo by Waad Hussain)

These open-source models allow government agencies, researchers and local innovators to fine-tune Earth-observation AI for their own geography and environmental pressures. Their applications, Bernabe-Moreno explained, have already produced unexpected insights — identifying illegal dumping sites, measuring how mangrove plantations cool cities, and generating flood-risk maps “for places that don’t usually get floods, like Riyadh.”

The relevance for Saudi Arabia is clear. Coastal developments require precise environmental modeling; mangrove restoration along the Red Sea is a national priority under the Saudi Green Initiative; and cities such as Riyadh and Jeddah have recently faced severe rainfall that strained existing drainage systems. 

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The ability to simulate these events before they unfold could help authorities make better decisions about zoning, infrastructure and emergency planning. Today’s satellites, Bernabe-Moreno said, provide “an almost real-time picture of what is happening on Earth,” shifting the challenge from collecting data to interpreting it.

This push toward actionable intelligence also reflects a larger transformation in research culture. Major advances in Earth observation increasingly depend on open innovation — shared data, open-source tools and transparent models that allow global collaboration. “Open innovation in this field is key,” Bernabe-Moreno said, noting that NASA, ESA and IBM rely on openness to avoid the delays caused by lengthy IP negotiations.

Scientific posters inside IBM’s research facility showcasing decades of breakthroughs in atomic-scale imaging and nanotechnology. (AN Photo by Waad Hussain)

Saudi Arabia has already embraced this direction. Through SDAIA, KAUST and national partnerships, the Kingdom is moving from consuming global research to actively contributing to it. Open geospatial AI models, researchers argue, give Saudi developers the ability to build highly localized applications adapted to the region’s climate realities and economic priorities.

Beyond Earth observation, IBM’s Zurich lab is pushing forward in another strategic frontier: quantum computing. Though still in its early stages, quantum technology could reshape sectors from logistics and materials science to advanced environmental modeling. 

Alessandro Curioni, IBM Research VP for Europe and Africa and director of the Zurich lab, stressed that quantum’s value should not be judged by whether it produces artificial general intelligence. Rather, it should be viewed as a tool to expand human capability. 

 Dr. Alessandro Curioni, VP of IBM Research Europe and Africa & Director of IBM Research Zurich/ (AN Photo by Waad Hussain)

“The value of computing is not to create a second version of myself,” he said, “it’s to create an instrument that allows me to be super-human at the things I cannot do.”

Curioni sees quantum not as a replacement for classical computing but as an extension capable of solving problems too complex for traditional machines — from simulating fluid dynamics to optimizing vast, interdependent systems. But he cautioned that significant challenges remain, including the need for major advances in hardware stability and tight integration with classical systems. Once these layers mature, he said, “the sky is the limit.”

DID YOU KNOW?

• Modern satellites deliver near real-time views of Earth’s surface.

• Geospatial foundation models transform vast satellite datasets into clear, actionable insights.

• These tools can produce flood-risk maps for cities such as Riyadh, analyze how mangroves cool urban areas, and even detect illegal dumping sites.

Saudi Arabia’s investments in digital infrastructure, sovereign cloud systems and advanced research institutions position the Kingdom strongly for the quantum era when enterprise-ready systems begin to scale. Curioni noted that Saudi Arabia is already “moving in the right direction” on infrastructure, ecosystem development and talent — the three essentials he identifies for deep research collaboration.

His perspective underscores a broader shift underway: the Kingdom is building not only advanced AI applications but a scientific ecosystem capable of sustaining long-term innovation. National programs now include talent development, regulatory frameworks, high-performance computing, and strategic partnerships with global research centers. Researchers argue that this integrated approach distinguishes nations that merely adopt technology from those that ultimately lead it.

Inside IBM’s hardware development lab, where researchers prototype and test experimental computing components. (AN Photo by Waad Hussain)

For individuals as much as institutions, the message from Zurich is clear. As Curioni put it, those who resist new tools risk being outpaced by those who embrace them. Generative AI already handles tasks — from literature reviews to data processing — that once required days of manual analysis. “If you don’t adopt new technologies, you will be overtaken by those who do adopt them,” he said, adding that the goal is to use these tools “to make yourself better,” not to fear them.

From geospatial AI to emerging quantum platforms, the work underway at IBM’s Zurich lab reflects technologies that will increasingly inform national planning and environmental resilience. 

For a country like Saudi Arabia — balancing rapid development with climate uncertainty — such scientific insight may prove essential. As researchers in Switzerland design the tools of tomorrow, the Kingdom is already exploring how these breakthroughs can translate into sustainability, resilience and strategic advantage at home.