Saudi Press

Saudi Arabia and the world
Thursday, Feb 02, 2023

Saudi construction sector to rebound as Giga projects pick up pace: Al Rajhi Capital   

Saudi construction sector to rebound as Giga projects pick up pace: Al Rajhi Capital   

Saudi Arabia’s construction sector has shown signs of recovery in the third quarter of 2022 as became evident following the rise in local cement sales volumes, an analysis report by Riyadh-based financial services firm Al Rajhi Capital showed.
The Kingdom’s sales of local cement increased by 5.4 percent year-on-year between July-November 2022 period while the consistent offtake of new residential loans, along with the softening of construction material prices, aided the recovery of the construction sector, the report added.  

It noted that Saudi Arabia continued to record strong growth in residential mortgages with the new deals averaging SR10.7 billion ($2.84 billion) per month for the period Jan-Oct 2022.  

“Going forward, we expect the strong offtake in mortgages to continue, as we expect the new mortgage to average SR7 billion per month in 2023, with the overall residential mortgage growing at a CAGR of 12 percent between 2022 and 2024,” the analysts said in the report.   

As Saudi Arabia is expected to accelerate execution of its mega and giga projects, the Al Rajhi Capital analysts said this in turn is likely to aid in the recovery of the construction segment.

The positive outlook comes as the Kingdom earlier this month announced a bumper budget, with a promise to continue with strong government spending for various sectors.     

Al Rajhi's report which analyzed the performance of Saudi firm Bawan said the recovery in the construction segment will aid the performance of the building material manufacturing company as 70 percent of its revenue comes from this segment.   

“We expect steel prices to soften in 2023, though we do not expect the same to have a major impact on the financials of the company, since the company maintains less than a month of steel inventory, and any changes in the prices are transferred to the end-user,” the report noted.   

However, it added that the scenario of increasing global interest rates is likely to impact the company’s cost of borrowing and the resultant cost of capital.   

The recovery in the construction segment is also likely to aid Saudi Ceramics positively, the report noted, as adverse commodity prices, which were having a negative impact on the company’s heater segment, are expected to ease.   

“The company’s strong market position will also aid its performance, though the recent trend of increasing competition is likely to limit the upside. Also, the scenario of increasing interest rate is likely to keep the interest cost of the company high,” the report added.   
Newsletter

Related Articles

Saudi Press
Close
0:00
0:00
WARNING GRAPHIC CONTENT - US Memphis Police murdering innocent Tyre Nichols
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
What is ChatGPT?
Bill Gates is ‘very optimistic’ about the future: ‘Better to be born 20 years from now...than any time in the past’
Tesla reported record profits and record revenues for 2022
Germany confirms it will provide Ukraine with Leopard 2 tanks
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Who’s Threatening Israeli Democracy?
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
Saudi FM discusses Kingdom’s economy, oil, Iran and US ties in Davos
Israelis rally in three cities against Netanyahu legal reforms
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Tesla slashes prices globally by as much as 20 percent
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Saudi Arabia plans to use domestic uranium for nuclear fuel
Mohammed Bin Salman chosen most influential Arab leader of 2022
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
United Arab Emirates says it will teach Holocaust in schools
Saudi Arabia set to overtake India as fastest-growing major economy this year 
International medical experts speak out against COVID-19 restrictions on China
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
TikTok CEO Plans to Meet European Union Regulators
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Saudi Arabia’s female ambassadors: Who are the five women representing the Kingdom?
Almubarak named ‘The Best Central Bank Governor of the Year 2023 for the Middle East’
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Dubai announces $8.7 trillion economic plan to boost trade, investment and global hub status
Coinbase to Pay $100 Million in Settlement With New York Regulator
FTX assets worth $3.5bn held by Bahamas securities regulator
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Hong Kong to scrap almost all its Covid rules
EU calls screening of travellers from China unjustified
US imposes Covid testing for visitors from China
Ukraine President Volodymyr Zelenskyy Addresses Joint Session of Congress - FULL SPEECH
Where is Rishi? Chancellor Jeremy Hunt's excuses about the UK's economic challenges just don't make sense
Former FTX CEO Bankman-Fried finally arrested in Bahamas after U.S. files charges
×