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RIYADH: Saudi Arabia has rolled out infra-guaranteed financing and surety bonds to support contractors in the construction industry, according to a senior official.

In an interview with Arab News at the third Private Sector Forum in Riyadh on Thursday, Leyla Abdimomunova, head of the Real Estate and Construction at PIF’s National Development Division, explained that her department is focused on strengthening the capabilities of contractors in the Kingdom through various upskilling initiatives and pre-qualification programs.

This push to fortify the construction sector is critical to Saudi Arabia’s broader economic diversification strategy, where infrastructure development plays a key role.

According to Mordor Intelligence, the Kingdom’s construction market is projected to reach $74.11 billion by 2025, with a compound annual growth rate of 5.37 percent, ultimately reaching $96.26 billion by 2030.

“One of the biggest issues that the contractors are facing is access to finance and resources, to be able to mobilize for their projects, to purchase materials, and to pay their workers throughout the whole project. And typically banks, they are not very eager to finance construction projects in general because they’re high-risk and smaller contractors in particular,” said Abdimomunova. 

She added: “So, we have created a number of products specifically targeting contractors. One of them is infra-guaranteed financing. National Infrastructure Fund guarantees up to 50 percent of the bank loans provided to contractors. We signed the first-ever infra-backed financing package. It was signed by the National Infrastructure Fund, Arab National Bank, and one of our contractors called Saudi Pan Kingdom Co.”

Abdimomunova stated that the inaugural infrastructure-backed financing package will be utilized for a project within ROSHN.

She also highlighted that Saudi Arabia is the first country in the Gulf Cooperation Council to introduce surety bonds, which serve as an alternative to traditional bank performance bonds.

“The second great achievement that we had on contractor financing is a completely new product in the GCC region. It is common across the world, but unfortunately, it was not previously available in the Kingdom, and it is called a surety bond. A surety bond is an insurance alternative to a bank performance bond,” said Abdimomunova. 

She added that the first-ever surety bond in the entire GCC region was signed between Walaa Insurance Co. and System Security Solutions Co. and it will serve one of the projects in Red Sea Global. 

Explaining more about surety bonds, she continued: “Surety bond allows to function like an insurance, where it provides a guarantee to the contractor that they can present to their client as a guarantee that if something wrong happens with the project, then insurance company will step in and cover the losses.”

Abdimomunova further explained that the primary role of the Real Estate and Construction Department is to develop products like surety bonds by collaborating with financial institutions, contractors, and development companies.

She also emphasized the growing importance of localizing building materials, as demand for such products is increasing in the Kingdom due to the ongoing large-scale infrastructure projects.

“What we are trying to do and the target that we created for ourselves is that at least 50 percent of the supply gap should be covered through localization. We are working with Saudi development companies to aggregate and estimate the demand for building materials. We have now a demand estimate until 2040,” said Abdimomunova. 

She added that this information will be leveraged to attract investors and help expand capacity by establishing more factories.

Abdimomunova also noted that her department is currently collaborating with 270 companies, half of which are based in the Kingdom, while the rest are international. This collaboration aims to increase the number of building material manufacturing factories in Saudi Arabia.

“Today, we have five factories already commenced last year. We expect about 20 more factories to open throughout the next two years. We have close to 100 companies already expressing their intent to localize,” said Abdimomunova. 

She added that her department is assisting companies in identifying investment opportunities, helping them conduct feasibility studies, facilitating connections with relevant ministries and financial institutions, and supporting them throughout the entire investment process.

Abdimomunova also outlined additional efforts by the Real Estate and Construction Department to support contractors in the Kingdom.

She explained that the department is responsible for developing the sector and the ecosystem surrounding the real estate development projects under PIF.

“So, what my department is doing is basically activating and mobilizing the whole ecosystem, attracting international contractors, working with the local contractors and helping them grow and prove their capabilities, attracting foreign direct investment into manufacturing of building materials, construction equipment, working with the local manufacturing partners to help them expand their capacity and build new factories, as well,” said Abdimomunova. 

She added that the primary goal of her department is to reach out to the private sector outside of the PIF, and bring them in to become the partners of the projects initiated by the wealth fund. 

According to Abdimomunova, the department is trying to strengthen medium-sized contractors through various initiatives and upskilling projects. 

“We have a Contractor Prequalification Program. So it’s a program that we run jointly with the Saudi Contractors Authority. It’s a platform which allows local contractors to register and pre-qualify to work with our development companies. So today we have almost 3000 contractors registered on the platform and more than 300 contractors pre-qualified,” said Abdimomunova. 

She added: “We also have contractor upskilling boot camps. So it’s a training program. These boot camps are organized either by ourselves or by development companies. Through these camps,  trying to give them the minimum skills that they need to be able to be invited to the projects and also to win this project.” 

RIYADH: Saudi Arabia’s multi-project developer Red Sea Global currently employs 70 percent of its workforce from the local population, according to the firm’s group chief financial officer.

Speaking at the PIF’s Private Sector Forum in Riyadh on Feb.13, Martin Greenslade said that the Kingdom’s leisure tourism industry witnessed substantial growth in recent years, as the country welcomed 17.5 million tourists in 2024, representing a rise of 656 percent compared to 2019.

These developments align with Saudi Arabia’s National Tourism Strategy, which aims to attract 150 million tourists by the end of this decade.

“In our company, we are around 70 percent Saudis. When it comes to the hotels and the workforce, that is something we are scaling rapidly by providing opportunities to as many people as we can,” said Greenslade.

He added: “Saudi Arabia is witnessing a massively growing environment of leisure tourism. Over the last five years, leisure tourists increased in Saudi Arabia by over 600 percent, 17.5 million visitors a year, just for leisure tourism. If we add all the other tourists, we are well over 100 million. So, we are on a sweet spot of growth.”

Regarding the number of visitors to the Red Sea, Greenslade revealed that the figures are still in the thousands as hotels are currently under development, adding that they will grow significantly in the coming years.

He added that 92 percent of visitors to the Red Sea are from the Gulf Cooperation Council region, with the majority being Saudi citizens.

“Right now, we only have these few hotels opened, and they have a very limited number of keys. So, the number of tourists is in the thousands. And they have largely come from the Gulf Cooperation Council. So, there have been some challenges with international tourism; the events in Gaza are challenging. But we are putting on more international flights,” said Greenslade.

He added that Shura Island, which falls within the Red Sea, will see the opening of 11 hotels in 2025, while seven hotels will be opened in AMAALA this year.

During the talk, the Red Sea official added that the company has paid over $20 billion in contracts to suppliers, and around 70 percent of that has gone to Saudi-based organizations.

Greenslade said about the potential spending in 2025: “I do not want to give the exact amount this year, but we are spending billions of dollars a year on developing this destination. Some of those are funded through debt financing and some of those from the PIF.”

Greenslade added that developing the residential side of the Red Sea is very important, as it is one of the best ways to attract private investments.

He highlighted that individuals wishing to consider the Red Sea a second home can also buy a residential unit.

“When you finish the visit to Red Sea, you feel so sad to leave, and if you never want to leave, you can buy your own residence,” said Greenslade.

He mentioned that tourists visiting the Red Sea will have an unforgettable experience.

“If you want to go to somewhere truly breathtaking, somewhere iconic, somewhere very different from anywhere else on earth, you book a ticket to the Red Sea. You would fly and land at the brand-new airport. The airport in the Red Sea has a runway large enough to take any plane,” said Greenslade.

He added: “Tourists visiting the Red Sea will get an electric vehicle to reach the seaplane terminal or boat where they will be guided to an island. These islands are incredible, the corals are fantastic, the snorkeling is amazing.”

The official further said that the company is eyeing to plant 50 million mangroves in the Red Sea project, aimed at ensuring sustainability.

He also highlighted that resorts in the Red Sea are fully powered using solar energy, and the same initiative will also be taken in AMAALA.

“We want to redefine how tourism interacts with the environment. We call it regenerative tourism. Mangroves are very important. We are looking to plant and preserve around 50 million mangroves. Mangroves are extremely important to coastal protection and for the wildlife that settles in and around it,” said Greenslade.

He added: “We are aiming to increase biodiversity by 30 percent. So, we have got an enormous nursery, a million sq. feet building, one of the largest nurseries in the world. We will see some 30 million plants go through there.”