Saudi Arabia’s construction sector experienced significant growth in 2024, with the issuance of 3,800 new licenses, bringing the total to 8,900 licensed construction companies in the Kingdom, according to Fahad Al-Hashem, the assistant deputy minister at the Ministry of Investment.

Al-Hashem made the announcement during a panel discussion at the Public Investment Fund Private Sector Forum held in Riyadh.

Data provided by the Ministry of Investment indicates a 59 percent annual increase in construction licenses issued in the fourth quarter of 2024. In total, 14,303 permits were awarded across various economic sectors last year, excluding permits related to the anti-concealment law.

Al-Hashem outlined that the construction sector was the leader in new licenses, followed by manufacturing, which received 676 licenses – representing a 39 percent annual increase – and wholesale and retail trade, which saw a remarkable 188 percent surge with 527 new licenses.

Altogether, these three sectors accounted for 55.7 percent of all licenses issued.

In addition to construction, the real estate sector witnessed an increase of 244 licenses issued in 2024, adding to the previously existing 446 licenses.

The deputy minister attributed the growth of the construction sector to a series of regulatory reforms designed to enhance foreign investment and simplify market entry.

Since the launch of Vision 2030, the Kingdom has identified 800 improvements to its regulatory framework, with approximately 80 percent already implemented.

A significant reform involved replacing the older licensing regime with a more streamlined registration system intended to facilitate market access for new entrants.

Al-Hashem pointed out ongoing government cooperation aimed at reducing the timeframe required for market entry, stating that initiatives such as the establishment of an international contractor office are in place to support these efforts.

In terms of economic impact, Saudi Arabia’s cumulative Gross Fixed Capital Formation (GFCF) and foreign direct investment (FDI) exceeded set targets for 2021-2024. By the third quarter of 2024, GFCF reached SR3.83 trillion, surpassing the target of SR3.22 trillion by 19 percent, while cumulative FDI inflows amounted to SR391 billion, exceeding the SR295 billion target by 33 percent.

The Kingdom also led the Middle East and North Africa region in total venture investment and ranked first globally for ease of starting a business, as reported by the Ministry of Investment.

Further emphasizing the Kingdom’s strategy, Al-Hashem noted that the regional headquarters program, which encourages multinational corporations to establish bases in Saudi Arabia through regulatory and tax benefits, issued 46 new licenses.

This initiative aims to bolster economic diversification, enhance employment, facilitate knowledge transfer, and increase investment across different sectors.

As the construction sector continues to expand, Saud Al-Sulaimani, country head of Saudi Arabia at JLL, highlighted the dual nature of the market's growth, characterized by both the redevelopment of existing projects and the initiation of new cities and development ventures.