COVID-19: Saudi Arabia’s Vision 2030 strategy funding cuts
A twin blow of record low oil prices and a coronavirus pandemic has forced Saudi Arabia to cut $8mn from its highly anticipated Vision 2030 modernisation programme
Vision 2030 introduction
The Saudi Vision 2030 strategic framework is designed to reduce the nation’s dependence on oil production, which makes up 30% to 40% of the country’s real GDP. The scheme, which was first announced in April 2016, is expected to help diversity Saudi Arabi’s economy, investing in public service sectors including education, healthcare, infrastructure recreation and tourism. Some of these projects will rely on mainly government funding in addition to investment from the private sector.
The vision includes various large construction projects including the redevelopment and expansion of some very major structures across different cities. Some of these include the Al Ruwaid Redevelopment, and Riyadh Medical Village, a $1.5bn project involving the construction of numerous hospitals, clinics, housing units and leisure facilities.
Austerity has begun to bite the economy in Saudi Arabia and the Middle East. Recent reports have forecast that the GDP contraction for 2020 could be as much as -3.2%. This is due to the continued decline of oil prices which plunged to $11.57 a barrel during last month.
Although the oil sector prices have begun increasing once again, the fall is expected to have a major effect on the nation’s economy. Furthermore, COVID-19 has already had an effect on the economy, with cases in the nation now rising above the 60,000 mark with little sign of slowing.
The spending cuts for the project, which are part of the nation’s wider austerity measures announced by the Saudi government, are not expected to affect workers’ salaries. This, however, could result in cuts to some of the planned construction projects as part of the scheme. It is currently unknown which projects will be cut, but spending cuts are expected across some of the strategy’s planned projects.
Vision 2030 plans
The investment powerhouse, which has reportedly secured over $500bn, includes ambitious major projects such as the construction of an entire city, NEOM, which is set to be 33 times the size of New York City. It has been described by Saudi’s as “the world’s most ambitious project” and will create billions of dollars for construction firms.
The plans also include a Red Sea luxury resort project which will be built between the towns of Umluj and Al-Wajh. This project is part of the project’s plan to increase tourism in the nation. Other projects include the Mall of Saudi, a 3.2bn shopping centre in the city of Riyadh which is due to be completed in 2022. A big renewable energy drive totalling up to around $200bn has also been announced which enable the nation to utilise cleaner energy.
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Skanska invests $225m in Houston office project
Skanska is investing US$225m in an office development project, 1550 on the Green in Houston, with construction expected to begin in June and scheduled to be completed in 2024.
The construction contract is worth US$125M, which will be included in the Q2 order bookings. International law firm Norton Rose Fulbright has signed a 15-year lease for about 30 percent of the building.
Located at 1550 Lamar Street, adjacent to Discovery Green, in downtown Houston, Skanska plans to develop and build a 28-floor, 34,800 square meter office tower.
1550 on the Green will be the first part of a three-block master plan by Skanska, which will transform the parcels into a distinguished district known as Discovery West and consist of 3.5 acres of mixed-use development full of restaurants, retail and lush green space. The project will target LEED and WiredScore Platinum certifications.
Since 2009, Skanska has invested a total of US$2.8 billion in commercial and multi-family projects, creating more than 1 million square meters of sustainable and community focused developments in select U.S. markets. Skanska USA had sales of SEK66 billion in 2020 with 7,600 employees in its operations.
Skanska’s flagship London office has set the standard in sustainable workspaces by becoming the first in the UK to achieve WELL Platinum under the new v2 pilot scheme.
The accreditation from the International WELL Building Institute (IWBI) was awarded through the v2 pilot, the newest version of the WELL Building Standard. It looks at all building features and management processes – from air and water quality to lighting, acoustics, nutrition, thermal comfort and mental wellbeing. It’s widely recognised as the industry yardstick for measuring how workspaces can contribute to the wellbeing of occupants.
The offices – which span three floors of the newly developed 51 Moorgate – contain floor-to-ceiling windows for extensive natural light, dedicated wellbeing and quiet spaces, as well as stringent air and water quality monitoring, among a range of other features that have helped earn the standard.
The company has also been exploring drone flights for use in industrial environments.
Peter Cater, Development Manager, said it was invited to carry out trials because of its use and knowledge of drone capability. "The trials have benefited everyone involved: sees.ai get to test their equipment and remote use of the drones and we get access to accurate, real-time data on our construction activities which benefits us and our customer, the Defence Infrastructure Organisation."
“Projects like this – at the forefront of innovation – go to show what an exciting industry construction is to be involved in. We are always looking for innovative ways of working, ways to be more sustainable so we can find better solutions for our customers. These trials are just one small part of our digital transformation journey.”