Discover how Saudi Arabia’s construction boom is transforming procurement through giga-projects, legal reforms, and local content initiatives
June 13, 2025
Saudi Arabia is in the midst of a construction renaissance, one of the largest in the world, driven by Vision 2030 and a government investment strategy that is reshaping the nation’s economic and infrastructural future. With a projected 4.4% growth in construction output in 2025 and an allocated budget of SAR 1.3 trillion ($342.7 billion)[1], the Kingdom’s construction sector is becoming an epicenter of opportunity and transformation for procurement professionals, suppliers, and contractors worldwide.
At the heart of this transformation are Vision 2030’s “giga-projects,” whose massive scale and strategic goals are redefining procurement practices across Saudi Arabia.
Other key developments include New Murabba ($50 billion), Diriyah Gate ($63.2 billion), and Jeddah Central ($20 billion). These mega-projects represent the most significant procurement opportunity in the region’s history, demanding a strategic and highly adaptive approach to supply chain management.
To support this wave of development, Saudi Arabia’s 2025 budget outlines an unprecedented SAR 1.3 trillion ($342.7 billion) in spending, a significant portion of which is allocated to infrastructure, housing, and transportation. Reports from late 2024 note a 33.8% year-over-year increase in Vision 2030 spending, underscoring the Kingdom’s commitment to its transformation goals[2].
Looking ahead, the construction sector is projected to maintain an annual average growth rate of 5.4% in 2026-29, bolstered by government initiatives to enhance the tourism sector and investments in diverse infrastructure projects[3].
Funding is primarily channeled through the Public Investment Fund (PIF), which not only bankrolls these giga-projects but also helps institutionalize procurement processes with clearly defined standards and oversight mechanisms.
Saudi Arabia has simultaneously restructured its procurement framework through the Government Tenders and Procurement Law (Royal Decree No. M/128), in effect since December 2019. This legislation enhances integrity, efficiency, and transparency in public procurement. It reinforces principles like:
Procurement methods remain varied, Public Tenders, Limited Tenders, and Direct Purchases, but are now governed by stronger compliance protocols and centralized oversight by the Ministry of Finance. This ensures a stable and transparent environment for both local and international stakeholders.
One of the most distinctive shifts in Saudi Arabia’s procurement approach is its aggressive push for local content. This is embodied in the In-Kingdom Total Value Add (IKTVA) program, launched in 2015 to drive domestic investment, diversify the economy, and boost employment.
In alignment with Vision 2030, the government now offers preferential treatment to:
By embedding these requirements into procurement evaluations (as detailed in Article 9 of the Procurement Law), Saudi Arabia incentivizes international firms to establish local partnerships, transfer knowledge, and invest in long-term infrastructure.
This is particularly relevant to construction procurement, where opportunities abound for local sourcing of materials, equipment, and engineering services. Companies demonstrating robust local value creation are more likely to secure government contracts, thus advancing the Kingdom’s broader diversification agenda.
The implications of this construction boom are vast, and complex. For procurement professionals, success in this environment demands:
There is a strong emphasis on transparency and ethics in the procurement process. While this levels the playing field, the sheer size and sophistication of projects also raise entry barriers. Only companies with significant financial, technical, and managerial capabilities can lead. However, the system creates ample space for SMEs and niche service providers to participate through subcontracting and partnerships.
Procurement professionals must also master stakeholder alignment, especially given the long-term nature and public visibility of these projects. Their role is no longer just transactional, it is strategic, involving risk management, regulatory understanding, and value optimization across complex supply chains.
Saudi Arabia’s construction surge, underpinned by Vision 2030, is fundamentally redefining procurement in the region. With a 4.4% projected growth in construction output for 2025 and government-backed mega-projects worth over a trillion riyals, the Kingdom offers an unparalleled landscape of opportunity for those equipped to operate in a transformed and highly regulated procurement environment.
The reforms in procurement law, focus on local content, and unprecedented government investment are creating a structured, transparent, and opportunity-rich market. For procurement professionals, the challenge is clear: adapt, collaborate, and lead in one of the world’s most ambitious national development efforts.
[1]. Saudi Construction Industry: Forecasts Point to 4.4% Growth in 2025, Saudi Arabia Construction by Eurogroup Consulting.
[2]. Saudi Arabia reveals 33.8% annual spending boost on Vision 2030 projects. Arab News.
[3]. Core sectors to lead Saudi construction growth in 2025. MEED.
