Saudi construction growth has accelerated sharply in 2026 despite changes in government-backed project spending. Contractor awards reached $32 billion during the first half of the year. That figure represents an 82 percent increase from the same period in 2025. The surge also shows a broader shift across the kingdom’s construction industry. Private investors and other public entities now play a larger role. Meanwhile, the Public Investment Fund has reduced its share of new project awards.
Contractor awards nearly doubled during the first six months of 2026. They climbed from $17 billion during the same period last year. Infrastructure awards also increased significantly during the period. They almost doubled to reach approximately $7 billion. However, power and water awards dropped by nearly 60 percent. Those projects totaled about $5 billion during the first half. Industry officials described the decline as a reallocation of projects. Therefore, the reduction does not necessarily indicate weakness across the wider market.
The changing project mix marks an important development for Saudi Arabia’s construction sector. The Public Investment Fund previously drove much of the kingdom’s major development activity. However, the fund ranked fifth among project clients during the first half. Adel Real Estate ranked first among clients announcing major projects. The Royal Commission for Makkah City and Holy Sites followed in second place. Al-Ittihad Club Company and the Royal Commission for Riyadh City ranked next. This ranking differs sharply from earlier expectations for the year.
The fund’s changing position also reflects its evolving investment strategy. Saudi Arabia has increasingly focused on improving project returns and attracting private investment. Consequently, several large developments have faced spending reviews and restructuring. The fund reduced financing for companies managing parts of its project portfolio. Some major developments have also changed leadership during the year. These developments point toward a more selective approach to future spending.
Despite those changes, Saudi construction growth remains strong across several areas. The largest contract during the first half involved the Amaya development in Jeddah. The project carries an estimated value of $4 billion. A major runway extension at King Salman International Airport followed closely. That project carries a value of approximately $3 billion. It represented the only Public Investment Fund project among the ten largest awards. Therefore, other clients increasingly contributed to the kingdom’s construction pipeline.
The Public Investment Fund also saw its share of contractor awards change dramatically. Its share reached about 65 percent in April. A single large contract contributed significantly to that monthly figure. However, the fund’s share dropped below 5 percent by June. The sharp movement highlights how individual awards can influence monthly construction data. It also shows the changing role of government-backed entities within the market.
Meanwhile, Saudi Arabia continues to advance its wider economic diversification plans. The kingdom wants private companies to contribute more capital to major developments. This approach could create new opportunities for contractors and developers. It could also reduce the construction sector’s reliance on government funding. As a result, companies may increasingly compete for projects from diverse clients.
The strong first-half performance also came despite difficult regional conditions. The construction industry continued securing major contracts during a period of geopolitical uncertainty. At the same time, investors have become more selective about large development commitments. Developers must therefore balance ambitious projects with stronger financial discipline. This trend could influence the pace and structure of future construction activity.
Analysts previously expected state-backed projects to provide greater stability for Saudi contractors. Government-linked infrastructure programs often receive stronger support during uncertain periods. However, the latest figures suggest that other clients can generate substantial demand. Private-sector participation could therefore become increasingly important over the coming years.
Overall, Saudi construction growth is entering a new phase. Government investment remains important, but its dominance has started to decline. Private investors and other institutions now have a bigger role. This shift could reshape the kingdom’s project pipeline and contractor opportunities. It may also encourage greater focus on projects with clear commercial returns. Consequently, Saudi Arabia’s construction sector could maintain strong activity while becoming more diversified.
