The country may be a new entrant to the international construction industry, however, it has had several well-established firms for many years. Both developers and contractors, such as the Kingdom Holding Company and Saudi Binladin Group, have grown into some of the best-known names in the country. With the country continuing to experience strong growth, Saudi’s biggest construction firms remain as busy as ever.
Reaching For The Sky
Kingdom Holding, which has a market capitalisation of SR63.4bn ($16.9bn), may be much more than a construction firm, but it retains a highly visible presence in the real estate and construction industry. Indeed, the company’s latest investment - the Kingdom Tower in Jeddah, part of the SR75bn ($20bn) Jeddah Economic City – is primed to become the tallest building in the world on completion in 2017. The 1-km-tall building will contain malls, hotels and apartments, and require SR4.6bn ($1.23bn) of investment. The firm is not stopping there. Kingdom Holding also plans to develop more than 19m sq metres of land in Saudi Arabia’s two largest cities, Jeddah and Riyadh, through projects worth a combined total of $19.96bn, according to Construction Week Online.
To deliver the Kingdom Tower project in Jeddah, the company has turned to another of Saudi’s heavyweights, the Saudi Binladin Group. In April 2012 Prince Alwaleed bin Talal, the chairman of Kingdom Holding Company, announced that the Saudi Binladin Group would invest SR1.5bn ($400m) for a 16.63% stake in the Jeddah Economic Company, the vehicle behind the tower and the wider Jeddah Economic City. Alwaleed also announced at the same time that the tower is expected to be complete within 63 months, or by the summer of 2017. As well as Kingdom Holding Company’s 33.35% stake and the Saudi Binladin Group’s 16.63% stake in the project, Abraar International Holding Company (33.35%) and the Jeddah businessman Abdulrahman Hassan Sharbatly (16.67%) also own equity in the development.
For the Saudi Binladin Group, founded in 1931, the Kingdom Tower project is unlikely to be a daunting prospect. The firm is privately owned and has become a vast multinational construction conglomerate that retains a full order book in the Kingdom. It has a number of high-profile mega project and infrastructure developments in the country including the King Abdullah Economic City, the King Abdullah Financial District and the King Abdulaziz International Airport.
Saudi Binladin Group was joined more than 30 years ago by Saudi Oger as another construction company with the size and capital to be entrusted with some of the Kingdom’s biggest and most strategically important projects. The company, which is privately owned by the Lebanese Hariri family and operates across a number of business lines, has a paid-up capital of SR750m ($200m). In the construction sector, the company has been involved in a number of segments of the market including ministerial buildings, social facilities, such as hospitals and schools, hotels and transportation and infrastructure projects. For example, the firm was also awarded work for King Abdulaziz International Airport, carrying out the development of the ground services equipment tunnel. At the same time, the company is overseeing a housing project for the Saudi Arabian National Guard in the Central Region.
Jabal Omar Development Company has also emerged as an important developer. Its role is fairly well defined, focusing attention on redeveloping Makkah for the 21st century. The firm has a market capitalisation of $4.71bn and has 2.2m sq metres of land near the Grand Mosque in the heart of the city on which it will develop new hotels, residential and commercial property and a new transit centre for the city. According to a report in Bloomberg in August 2012, the company will develop 10 new hotels within the city in the next year alone. Indeed, the rapid transformation of Saudi Arabia, from new cities to a national and international rail network, requires companies that leverage economies of scale. The latest construction frenzy is thus feeding well-established companies and creating a new generation of large-scale firms.
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