Saudi Arabia Government Spending & Mega Projects Review 2025–2026

Based on publicly available official government and authoritative press sources.

Kingdom of Saudi Arabia — Government Spending & Mega Projects Review | 2025–2026

KINGDOM OF SAUDI ARABIA

Government Spending & Mega Projects Review

Fiscal Years 2025–2026 and the Mega Projects Pipeline

Published: May 2026

Based on publicly available official government, parliamentary, and authoritative press sources.

Executive Summary

Saudi Arabia is navigating one of the most consequential periods in its modern economic history. Under Vision 2030 — Crown Prince Mohammed bin Salman’s decade-long roadmap to diversify the economy beyond oil — the Kingdom has committed to a programme of government spending, institutional reform, and mega-project development on a scale rarely seen in modern history.

The 2026 state budget, approved in December 2025, projects total expenditure of SAR 1.313 trillion (approximately USD 350 billion) and revenues of SAR 1.147 trillion, with a deficit of SAR 165 billion (3.3% of GDP). This follows a larger-than-expected deficit of SAR 245 billion in 2025, driven by lower oil prices and a strategic decision to prioritise transformational spending. The government has set a clear course for fiscal consolidation over 2026–2028, targeting a deficit reduction to SAR 125 billion by 2028.

At the same time, the broader mega-project landscape is undergoing a significant recalibration. The Public Investment Fund (PIF), the SAR 3+ trillion sovereign wealth fund at the heart of Vision 2030, implemented substantial spending cuts in late 2024 and 2025, pausing some headline projects and scaling back others as oil revenues fell short of requirements. This report provides an accurate, balanced account of what is being built, what has been paused, and what remains on the horizon.

Metric	2025 Budget	2026 Budget
Total Expenditure	SAR 1.285 trillion	SAR 1.313 trillion
Total Revenue	SAR 1.184 trillion	SAR 1.148 trillion
Deficit	SAR 101 billion (2% GDP)	SAR 165 billion (3.3% GDP)
Oil Price Assumption	USD 69/barrel	USD 61/barrel
PIF Assets	USD 913 billion
Vision 2030 Investment Target	USD 3.3 trillion by 2030

1. The 2025–2026 State Budget: Overview

1.1 Budget Framework

The 2025 State Budget was approved by the Council of Ministers at total expenditures of SAR 1.258 trillion and revenues of SAR 1.184 trillion. The 2026 budget, approved on 2 December 2025, projects revenues of SAR 1.147 trillion and expenditures of SAR 1.313 trillion — a slight nominal reduction in spending relative to 2025 estimates, reflecting the government’s commitment to fiscal discipline.

Finance Minister Mohammed Al-Jadaan emphasised that the 2026 budget maintains ‘continued allocations for education, health and social services, alongside investments in infrastructure and quality-of-life improvements across the Kingdom’s regions,’ while targeting long-term fiscal sustainability.

1.2 Revenue Outlook

Saudi revenues are derived from two main streams:

• Oil revenues (approx. 60% of total): Generated from Saudi Aramco dividends, royalties, and petroleum-related taxes. In 2025, revenue fell approximately 13% compared to 2024, largely due to lower oil prices and OPEC+ production constraints. Aramco cut its dividend by approximately USD 40 billion for 2025, directly reducing PIF cash flow.

• Non-oil revenues (approx. 40%): VAT (the single largest non-oil source), corporate income tax, zakat, government fees, customs duties, and investment income. Non-oil GDP grew an estimated 5% in 2025, and real GDP growth is forecast at 4.6% for 2026 — driven primarily by the non-oil private sector.

The 2026 budget projects a 5.1% increase in revenues relative to 2025, with a 1.7% decline in spending, producing the narrower deficit of SAR 165 billion. Saudi Arabia is targeting non-oil revenue growth as a structural priority; the Kingdom aims to reach SAR 388 billion in annual FDI by 2030, against a 2025 actual of approximately SAR 120 billion.

1.3 Expenditure Structure

Total expenditure in 2026 is set at SAR 1.313 trillion, directed toward:

• Education: Approximately 15% of government expenditure (World Bank 2024 data), the largest single sectoral share. Investment in education digitisation continues as a 2026 priority, with further integration of technology into national curricula.

• Healthcare: SAR 260 billion allocated in 2025 for healthcare and social development — the equivalent of approximately 12% of the total budget. Hospital modernisation, primary care expansion, and public health programmes are key focus areas.

• Infrastructure and transport: Approximately 10% of the budget, covering roads, railways, airports, and utilities — plus additional flows through PIF and National Infrastructure Fund channels.

• Defence and security: Defence spending was approximately SAR 237 billion in 2024, with acquisition of new platforms and systems continuing as priorities in 2026.

• Capital expenditure: SAR 162 billion (~USD 43 billion) allocated in 2026 for infrastructure-led development, targeting transport, utilities, urban development, and national projects.

• Subsidies: An expected 63.5% increase (approx. SAR 13 billion) in subsidy expenditure due to reclassification of certain hospital and sports federation budgets.

1.4 Deficit, Debt & Fiscal Strategy

The 2025 deficit reached an estimated SAR 245 billion (5.3% of GDP) — more than double the original projection of SAR 101 billion. This was driven by oil price underperformance (Saudi Arabia’s fiscal breakeven oil price is approximately USD 90/barrel, per IMF estimates, while prices hovered near USD 71/barrel through mid-2025), a spending overrun of approximately 4%, and the deliberate continuation of transformational expenditure.

For 2026, the government projects deficit reduction to SAR 165 billion, with a further narrowing to SAR 125 billion (2.2% of GDP) by 2028. The 2026 borrowing plan is approximately SAR 217 billion — a 56% increase from 2025 — drawing on domestic bonds, sukuk, and international debt markets. Saudi Arabia’s public debt-to-GDP ratio is projected to rise to approximately 32.7% by end-2026, well below regional peers and international norms.

Saudi Finance Minister Al-Jadaan confirmed in late 2025 that the Kingdom is ‘willing to defer or cancel projects within its Vision 2030 program without blinking if they no longer make economic sense or fail to deliver value’ — a significant and candid statement of fiscal pragmatism.

2. Sector Spending Priorities

2.1 Education

Education remains the single largest sectoral allocation in Saudi Arabia’s budget, consuming approximately 15% of government expenditure. 2026 priorities include:

• Continued digitisation of the education sector — expanding e-learning infrastructure and integrating AI into national curricula.

• Increased employment of Saudi nationals in teaching roles (Saudisation of teaching workforce).

• Construction and equipping of new schools to serve rapidly growing housing communities (particularly ROSHN-developed urban areas).

• University capacity expansion and research investment as part of the knowledge economy strategy.

2.2 Healthcare

SAR 260 billion is allocated to the health and social development sector in 2025, reflecting the government’s commitment to improving universal access. Key 2025–2026 programmes include modernisation of hospital infrastructure, expansion of primary health facilities across all regions, digital health platforms, and health sector privatisation — with additional private hospitals and clinics operating under government concession arrangements.

2.3 Infrastructure, Transport & Utilities

Infrastructure investment flows through multiple channels: direct budget allocations, PIF-backed projects, and the SAR 200 billion National Infrastructure Fund (NIF, launched 2021). The 2026 budget directs SAR 162 billion in capital expenditure primarily toward:

• Transport systems: roads, urban metro projects, airport expansion, and the National Rail programme.

• Utilities: water desalination, wastewater treatment, power generation, and grid expansion — Saudi Arabia currently meets over 60% of its water needs through desalination and is expanding capacity toward 90%.

• Urban development: housing programmes (ROSHN), municipal services, and master-planned communities.

• Renewable energy: solar and wind projects, with Saudi Arabia targeting 50% renewable electricity by 2030.

2.4 Hajj & Religious Tourism Infrastructure

The modernisation of facilities serving Hajj pilgrims is explicitly identified as a 2026 government priority. Investment includes expanded infrastructure at Makkah and Madinah, airport upgrades at King Abdulaziz International Airport in Jeddah (which recorded a record 53.4 million passengers in 2025 — a 9% year-on-year increase), and transportation networks connecting holy sites.

2.5 Digital Economy & Artificial Intelligence

The 2026 budget continues to drive initiatives supporting the digital economy, including expansion across data centres, AI platforms, and logistics hubs. Saudi Arabia is targeting enhanced international competitiveness through digital infrastructure, with the HUMAIN initiative (PIF’s AI and technology company) and partnerships with global tech firms forming the backbone of this strategy.

2.6 Defence

Defence and security spending remains elevated at approximately SAR 237 billion annually, with continued acquisition of new military platforms and systems. Regional security dynamics, including the ongoing Iran-related geopolitical environment, have maintained defence as a protected budget line.

3. The Giga-Projects Programme: Status & Outlook

Saudi Arabia’s giga-project programme — investments totalling over USD 900 billion in planned development — remains one of the largest construction pipelines in world history. Since the launch of Vision 2030 in 2016, contracts totalling USD 196 billion have been awarded across the flagship projects (Knight Frank, October 2025). However, the programme has entered a period of significant recalibration since late 2024, driven by fiscal pressures and a shift toward projects with demonstrable near-term economic returns.

3.1 NEOM — The Flagship Mega-Region

Total Investment: $500 billion+ (original plan)

NEOM is an entirely new economic zone — roughly the size of Belgium — in the Kingdom’s northwest, encompassing multiple sub-projects in desert, mountain, and Red Sea coastal environments. It operates under its own legal and regulatory framework.

THE LINE: The centrepiece — a 170 km linear city comprising two mirrored parallel structures, 500 metres tall and 200 metres apart, housing up to 9 million residents with zero cars and 100% renewable energy.

TROJENA: A year-round mountain tourism and ski destination in the Hisma highlands, selected to host the 2029 Asian Winter Games. The Games were subsequently relocated to Almaty, Kazakhstan, in January 2026. Trojena remains an active project, with the hospitality component (The Chedi TROJENA, operated by General Hotel Management) proceeding.

SINDALAH: A luxury island resort in the Red Sea — the first NEOM sub-project to approach completion. An opening party was held in October 2024, though the island remains closed to the public as of mid-2026. Sindalah is considered NEOM’s strongest near-term deliverable and proof of concept.

OXAGON: NEOM’s industrial and innovation hub at a floating octagonal platform on the Red Sea, housing advanced manufacturing, a port, and logistics. The green hydrogen plant at Oxagon reached 80% completion and is on track for mid-2026 delivery; green ammonia exports are expected to begin in 2027. This is the most operationally advanced major NEOM component.

3.2 Diriyah — Culture & Heritage Destination

Total Investment: USD 62.2 billion | Contracts Awarded to Date: USD 14.5 billion

Located on the edge of Riyadh, Diriyah transforms the historic birthplace of the Saudi state — including the UNESCO World Heritage Site of At-Turaif — into a world-class heritage tourism, hospitality, and cultural destination. The project includes 38 hotels, 300+ retail outlets, 100+ dining venues, museums, and a performing arts theatre, all built in traditional Najdi architectural style.

• Bujairi Terrace (dining and retail promenade overlooking At-Turaif) opened in 2022 and has become one of Riyadh’s most popular destinations.

• A USD 1.5 billion contract for the Arena Block (multi-purpose indoor Diriyah Arena, three mixed-use office buildings, and a parking facility) was awarded in 2025.

• A further USD 45.6 billion remains in the pipeline. Diriyah is considered among the most commercially viable of the giga-projects and has seen consistent contract awards even during the PIF recalibration period.

3.3 Qiddiya — Entertainment & Sports Capital

Total Investment: USD 8+ billion (initial phases)

Qiddiya, located 45 km southwest of Riyadh, is designed as Saudi Arabia’s cultural and entertainment capital. Its masterplan encompasses a Six Flags theme park, a massive waterpark (Aquarabia), a motorsport venue (Speed Park), a Jack Nicklaus signature golf course, residential neighbourhoods, arts and cultural venues, and a dedicated entertainment district.

• Six Flags Qiddiya: Opened 31 December 2025 — the first Six Flags park outside North America since 2004. Features 28 exclusive rides including Falcon’s Flight (the world’s tallest, fastest, and longest roller coaster).

• Aquarabia Water Park: The largest water park in the Middle East with 20+ rides including four world-record attractions. Opening scheduled for 23 April 2026.

• Major earthworks are complete, with theme park and motorsport facility construction advancing. Qiddiya is among the most actively delivering giga-projects in 2025–2026.

3.4 ROSHN — National Community Developer

Total Investment: Ongoing | Multiple cities across the Kingdom

Unlike tourism-focused giga-projects, ROSHN builds complete integrated residential communities — addressing Saudi Arabia’s housing supply gap and supporting the Vision 2030 goal of increasing homeownership to 70%. ROSHN’s communities feature pedestrian-friendly streets, green spaces, retail, healthcare facilities, schools, and mosques.

• Active developments include SEDRA, ALAROUS (Riyadh), and projects in Jeddah, Al Kharj, Al Hofuf, Al Qatif, Makkah, and Abha.

• Two new projects unveiled in 2025: WAREFA in Riyadh’s Al Janadiriyah district and ALFULWA in Al-Ahsa.

• ROSHN’s communities are considered among Vision 2030’s most tangible citizen-facing deliverables — thousands of homes have been delivered to Saudi families.

3.5 Red Sea Global (RSG) — Luxury Tourism Development

Total Investment: USD 30+ billion (original plan)

Red Sea Global is developing a luxury tourism archipelago spanning 22 islands and 200+ km of coastline along Saudi Arabia’s northwestern Red Sea coast. Phase 1 opened 10 resort properties in 2023–2024, with Shebara, Nujuma (a Ritz-Carlton Reserve), and others among the early completions.

However, RSG has entered a period of significant scale-back. PIF is ‘re-evaluating the whole Red Sea project’, treating Phase 1 as ‘proof of concept.’ Staff are being transferred to Diriyah and Qiddiya. Occupancy rates at the completed resorts have reportedly been modest, raising commercial viability questions.

3.6 King Salman International Airport (KSIA)

Total Investment: Multi-decade, phased construction

One of the most significant infrastructure projects currently in active construction, KSIA is an expansion of the existing King Khalid International Airport, located north of Riyadh. When complete, it will be among the world’s largest airports by passenger capacity:

• Target capacity: 120 million passengers annually by 2030, rising to 185 million passengers and 3.5 million tonnes of cargo by 2050.

• Scale: 57 sq km, six runways, multiple terminals.

• Economic impact: SAR 27 billion annually to non-oil GDP; 103,000 direct and indirect jobs.

• Construction of a third runway commenced in late 2025. Bechtel signed an executive partnership in May 2025 to develop three passenger terminals. Parsons was awarded two four-year delivery partner contracts covering runways, taxiways, air traffic control towers, and ground infrastructure.

• A new 40-million-passenger commercial terminal is planned, with construction scheduled to begin in 2026. Airport operations are targeted to begin in 2029.

• KSIA will be the future home of Riyadh Air — the Kingdom’s new national carrier — adding further strategic significance.

3.7 King Salman Park

Total Investment: Multi-billion SAR

A 16.9 sq km public green district being developed on the former Riyadh air base site — one of the largest urban parks in the world. Designed by Omrania as lead consultant with Henning Larsen for masterplanning, the park will include approximately one million trees, branching valley landscape networks, cultural venues, and mixed-use development.

• Initial phases targeting opening in late 2026.

• Substantial completion targeted for 2027.

• Treated wastewater irrigation and soil regeneration systems address Riyadh’s arid climate challenges.

3.8 FIFA World Cup 2034 Infrastructure

Total Investment: Hundreds of billions SAR across stadiums, airports, transport

Saudi Arabia will host the 2034 FIFA World Cup, providing a hard delivery deadline for major infrastructure across five host cities: Riyadh, Jeddah, Al Khobar, Abha, and NEOM. Budgets for World Cup-linked projects have been protected from PIF’s recalibration, according to sources. Fifteen stadiums are planned:

• King Salman International Stadium (Riyadh): 92,760-seat flagship designed by Populous; will host the opening ceremony and final match. Construction starting 2025, opening 2029.

• King Fahd International Stadium (Riyadh): Existing 58,398-capacity stadium being reconstructed and expanded to approximately 92,000 seats by 2026.

• Aramco Stadium (Al Khobar): Construction commenced 2024; 47,000 capacity; targeting 2026 completion. Co-developed with ROSHN using latest cooling technologies.

• Jeddah Central Stadium: Already under construction as part of the wider Jeddah Central Development masterplan.

• NEOM Stadium: 46,000-capacity venue in The Line; construction set to begin 2027 with completion in 2032; will run on 100% renewable energy.

Alongside stadium construction, Saudi Arabia is investing in transport connectivity between host cities, expanded airport capacity, and urban transport (electric bus rapid transit and rail systems serving stadium precincts). The 2027 Asian Cup — a near-term dress rehearsal — is also driving early stadium completion milestones.

3.9 Other Major Projects

Jeddah Central Development: USD 20 billion mixed-use project transforming 5.7 sq km of Jeddah’s waterfront into a tourism, entertainment, and residential destination. Includes the Jeddah Central stadium, opera house, aquarium, marina, and branded residences.

New Murabba (Riyadh): A 19-sq-km new downtown district anchored by The Mukaab — a 400-metre cube-shaped structure housing an immersive digital experience (one of the most ambitious architectural concepts in the project pipeline).

Amaala: A luxury wellness and arts destination on Saudi Arabia’s northwest coast (Red Sea), positioned as the ‘Riviera of the Middle East.’ Development is proceeding on a more measured timeline.

AlUla: Described as the world’s largest living museum, AlUla develops the ancient Nabataean city of Hegra (a UNESCO World Heritage Site) as a global cultural tourism destination. The Royal Commission for AlUla continues to invest in hospitality, archaeology, and art infrastructure.

National Rail Expansion: Saudi Arabia’s National Railway Network connects Riyadh, Dammam, and the Eastern Province; expansion toward Jeddah and integration with the GCC railway network is progressing.

Renewable Energy (NEOM Green Hydrogen, NEOM City): Beyond Oxagon’s green hydrogen plant (80% complete, on track for mid-2026 delivery), Saudi Arabia is pursuing utility-scale solar (Al Shuaibah, Sudair Solar farms), wind, and green hydrogen projects as part of its target of 50% renewable electricity by 2030.

4. Mega Projects Summary

The table below provides a current status snapshot of Saudi Arabia’s major projects as of mid-2026:

Project / Initiative	Sector	Scale / Value	Status (Mid-2026)
NEOM (THE LINE)	Urban / Smart City	USD 200bn+ (The Line alone)	Suspended Sep 2025; scaled back first phase under review
NEOM (Sindalah)	Luxury Tourism	Part of NEOM $500bn	Near completion; soft opening held Oct 2024
NEOM (Oxagon Green H2)	Green Energy	Part of NEOM	80% complete; delivery mid-2026
NEOM (Trojena)	Mountain Tourism	Part of NEOM	Partially suspended; hospitality ongoing
Diriyah Gate	Heritage / Tourism	USD 62.2 billion	Actively delivering; USD 1.5bn contract in 2025
Qiddiya	Entertainment	USD 8bn+ initial phases	Six Flags open Dec 2025; Aquarabia Apr 2026
ROSHN	Residential	Ongoing national	Delivering thousands of homes; 2 new projects 2025
Red Sea Global (Phase 1)	Luxury Tourism	USD 30bn+ planned	Phase 1 open; Phase 2 paused; PIF review underway
King Salman Intl. Airport	Aviation	Multi-decade, SAR trillions	Under construction; runway works started Sep 2025
King Salman Park	Urban Green Space	Multi-billion SAR	Phases opening late 2026; completion 2027
Jeddah Central	Mixed-Use Urban	USD 20 billion	Under construction
New Murabba / The Mukaab	Urban Development	New downtown district	The Mukaab under review; masterplan continues
FIFA 2034 Stadiums (15)	Sports Infrastructure	Hundreds of billions SAR	Key stadiums under construction; completion by 2029–2032
AlUla	Cultural Tourism	National programme	Ongoing; hospitality & archaeology expanding
Amaala	Luxury Wellness	Phased development	Proceeding on revised timelines
NEOM Green H2 (Oxagon)	Renewable Energy	Multi-billion USD	80% complete; exports 2027
National Rail Expansion	Transport	National network	Progressing; GCC integration ongoing
Solar / Renewable Energy	Energy	50% RE target by 2030	Multiple large plants under development

5. The Broader Picture: Recalibration, Not Collapse

The scale-back of some headline projects — particularly THE LINE’s suspension — has generated significant international media coverage. It is important to contextualise these developments accurately:

First, the recalibration is fiscally driven, not strategically abandoned. Lower oil prices (approximately USD 71/barrel in 2025, against a fiscal breakeven of approximately USD 90/barrel), Aramco’s dividend cut, and PIF cash flow constraints forced a prioritisation exercise. Saudi Finance Minister Al-Jadaan and PIF Governor Yasir Al-Rumayyan have both acknowledged this shift transparently.

Second, the non-oil economy is genuinely growing. Non-oil GDP grew approximately 5% in 2025 and 3.7–3.8% in prior years. Tourism arrivals totalled 60.9 million in the first half of 2025 alone, on track to approach or exceed 120 million for the full year. Qiddiya is delivering real attractions, Diriyah is attracting real visitors, and ROSHN is housing real families. The Vision 2030 transformation is producing tangible results alongside the iconic megaprojects.

Third, projects tied to immovable deadlines — most importantly the 2034 FIFA World Cup and Expo 2030 in Riyadh — have protected budgets and are proceeding to schedule. These represent an enormous infrastructure stimulus that will shape Saudi cities for decades.

Fourth, the PIF is evolving from a pure development vehicle toward a more returns-oriented sovereign wealth fund. Its revised 2026–2030 strategy will place greater emphasis on attracting international private capital, co-investment partnerships, and near-term financial returns. This is consistent with the behaviour of the world’s most sophisticated sovereign wealth funds and suggests a maturation, not a retreat.

Milestone	Detail
Non-oil GDP	Now 55.6% of real GDP (up from 45.4% in 2016)
Unemployment	At record lows; women’s workforce participation above 30% target
Tourism	60.9 million visitors in H1 2025
Entertainment	Six Flags Qiddiya opened Dec 2025 — first new Six Flags outside North America since 2004
Aviation	Jeddah airport handled record 53.4 million passengers in 2025
Contracts awarded	USD 196bn in giga-project contracts since 2016 (Knight Frank 2025)
Financial hub	King Abdullah Financial District (KAFD) now a functioning district
Diriyah	Bujairi Terrace — one of Riyadh’s most popular dining destinations since 2022

6. What This Means for Foreign Contractors and Suppliers

The recalibration of Saudi Arabia’s mega-project programme has reshaped, but not closed, the opportunity for foreign contractors, consultants and suppliers. The headline change is that the Kingdom is now buying differently: with sharper price discipline, a clearer preference for proven delivery capability, and a strong push to localise where domestic capacity exists. The sections below set out, sector by sector, where foreign firms still hold a competitive edge in 2026 and where the window is narrowing.

6.1 Aviation and Airport Infrastructure

King Salman International Airport is the most operationally active large infrastructure programme in the Kingdom and will remain a foreign-contractor stronghold through 2030. The early appointments of Bechtel (terminals) and Parsons (delivery partner for runways, taxiways and air traffic control infrastructure) confirm that the client (Matarat Holding via the KSIA Development Company) intends to source international expertise at programme-management and specialist-systems level. Opportunities through 2027 will concentrate on baggage-handling systems, airport IT and biometric platforms, specialist aviation MEP, fuel infrastructure, control-tower systems, and runway pavement engineering — categories where Saudi domestic capacity is limited. Jeddah’s record 53.4 million passengers in 2025 also signals further capacity expansion tenders at King Abdulaziz International, particularly around Hajj and Umrah peak handling.

6.2 FIFA World Cup 2034 and Sports Infrastructure

World Cup 2034 budgets are explicitly protected from PIF’s wider recalibration, with the 2027 Asian Cup acting as an enforced near-term delivery milestone. Of the 15 planned stadiums, the highest-value foreign opportunities lie in specialist stadium engineering: roof and façade systems, advanced cooling technologies (a non-negotiable given climate conditions), broadcast and IT infrastructure, turf systems, security and crowd-management technology, and the design-led architectural lead role. Populous is already engaged on King Salman International Stadium; comparable lead-design roles are likely on remaining venues. Foreign firms with Qatar 2022 delivery credentials hold a clear advantage and should be positioning now — not in 2027, when packages will already be substantially placed.

6.3 Water, Desalination and Utilities

Water remains one of the most resilient and foreign-friendly procurement segments in the Kingdom. Saudi Arabia meets over 60% of its water needs through desalination and is expanding capacity toward 90% — an envelope that domestic suppliers cannot meet alone. The Saudi Water Authority and SWPC continue to tender independent water and power producer (IWP/IPP) structures that depend on international technology providers (membranes, reverse osmosis trains, energy-recovery systems) and on European, Japanese and Korean EPC consortia. Wastewater treatment, smart metering and non-revenue water reduction are smaller but underserved subsegments where European specialist firms have a strong fit. This is among the most attractive sectors for new market entrants with proven references.

6.4 Renewable Energy and Green Hydrogen

The Kingdom’s 50% renewable electricity target by 2030 sustains a continuous pipeline of utility-scale solar and wind tenders under the National Renewable Energy Programme. Chinese developers and EPC contractors have taken leading positions in recent auction rounds at aggressive tariffs, compressing margins for Western competitors at the pure-EPC level. The defensible foreign positions in 2026 are in higher-value specialist niches: grid integration and storage engineering, green hydrogen and ammonia technology (where the NEOM/Oxagon project provides a reference and a customer pipeline), transmission system upgrades, and Owner’s Engineer / lender’s technical advisor mandates on financed projects. European and Japanese firms remain preferred in these advisory roles.

6.5 Healthcare Infrastructure and Technology

The SAR 260 billion healthcare allocation, combined with ongoing sector privatisation, creates a sustained pipeline for foreign hospital operators, medical-equipment OEMs, healthcare IT vendors and clinical-system specialists. Hospital privatisation concessions are an underappreciated opportunity for international operators with track records in PPP delivery (NHS-experienced UK groups, German and French hospital operators, established US health systems). Medical imaging, oncology, robotic surgery and laboratory automation remain heavily import-dependent. Telemedicine and electronic health records are areas where Saudi clients still prefer established international platforms over domestic alternatives.

6.6 Heritage Tourism, Hospitality and Cultural Projects

Diriyah, AlUla and Qiddiya have emerged as the most reliable destinations for foreign architecture, hospitality-operator, themed-entertainment and specialist-contractor work. Diriyah’s commitment to traditional Najdi architecture creates premium opportunities for heritage-restoration specialists, master craftsmen and high-end finishes suppliers. The Qiddiya Six Flags and Aquarabia openings demonstrate continuing demand for ride manufacturers, themed-entertainment designers and operations consultancies. International luxury hotel brands, F&B operators and museum-design firms (Atelier Brueckner, Ralph Appelbaum, Event Communications and peers) continue to win mandates. Of the giga-projects, Diriyah is the most consistent payer and the most operationally mature client.

6.7 NEOM and the Red Sea: Manage Exposure

THE LINE’s suspension and Red Sea Global’s Phase 2 pause have left a trail of cancelled, deferred and renegotiated contracts — and a significant working-capital problem for contractors who staffed up against expected volumes. Foreign firms approaching the NEOM sub-portfolio in 2026 should structure engagement around the operationally advancing nodes (Sindalah, Oxagon green hydrogen, Trojena hospitality) rather than the visionary components, and should seek milestone-based payment structures with clear pause-clause protection. The viable opportunities in this segment are concrete and bounded: green hydrogen/ammonia technology and offtake at Oxagon, hospitality operations and consulting at Sindalah and Trojena, and specialist marine and dredging works. Treat the rest as optionality, not pipeline.

6.8 Defence, Security and Dual-Use Technology

Defence spending of approximately SAR 237 billion annually remains a protected budget line with elevated foreign-supplier dependency. Saudi Arabia’s Military Industries (SAMI) localisation drive has shifted the entry route: increasingly, foreign primes are required to form joint ventures with SAMI or to commit to local manufacturing under offset programmes (GAMI’s Localisation Programme targets 50% of military spending domestically by 2030). US, UK, French, Italian, German, South Korean and Turkish primes have all secured varying levels of position. Cybersecurity, ISR systems, naval and coastal protection, air defence, and battlefield IT remain technology-import-dependent for the foreseeable future.

6.9 Financing, Legal and Advisory Services

PIF’s revised 2026–2030 strategy — emphasising private capital mobilisation, co-investment and returns discipline — expands rather than contracts opportunities for international financial advisors, project-finance banks, ECAs and legal counsel. The 56% increase in the 2026 borrowing plan and active sukuk issuance create a deep pipeline for bookrunners, rating advisors and legal counsel on international debt programmes. The Big Four accounting firms, top-tier global law firms with regional benches (Clifford Chance, Linklaters, White & Case, Allen & Overy, Bracewell), and specialist project-finance houses are positioned for a high-volume 2026–2028. Foreign advisors with Public-Private Partnership credentials are particularly relevant given the National Centre for Privatisation pipeline.

6.10 Sectors Where the Foreign Window Is Narrowing

Several sectors that were lucrative for foreign contractors in the 2016–2022 period have become substantially more localised or competitively saturated, and new entrants should size opportunity carefully. Commodity civil construction (general building, roads, basic concrete works) is now dominated by Saudi nationals and well-established Asian contractors at margins that international generalists cannot meet. Residential development through ROSHN is procured primarily through Saudi-led joint ventures, with foreign roles confined to specialist design and consulting. Domestic professional-services categories — standard architecture, run-of-mill engineering consultancy, mid-tier project management — have a growing Saudi national base that the Regional Headquarters programme is also reinforcing. Foreign firms entering these segments without a clearly differentiated capability face thin margins and increasing commercial pressure.

6.11 Strategic Posture for 2026–2028

For international firms positioning around Saudi Arabia over the next three years, four propositions hold. First, the Regional Headquarters programme has now made physical Saudi presence (typically in Riyadh) a near-prerequisite for substantial government contracts; firms still managing the market from Dubai are losing ground. Second, partnerships with credible Saudi counterparts — ideally PIF-portfolio companies or established family conglomerates — are increasingly the route to qualification, not an optional accelerator. Third, the geographic centre of foreign-contracting opportunity has shifted decisively from the conceptual giga-projects toward the deliverable infrastructure spine: airports, stadiums, water, healthcare, transmission, and Riyadh urban development. Fourth, the buyer’s tone has changed: Saudi clients in 2026 are demonstrably more price-disciplined, more scrutinising on delivery references, and less tolerant of cost overruns than at any point since 2016. Foreign firms that adapt their commercial posture accordingly will find a market that remains, despite the recalibration, the single largest construction and procurement opportunity in the world.

7. Conclusion

Saudi Arabia’s 2025–2026 government spending plans and mega-project pipeline reflect a Kingdom at a pivot point. The era of ‘announce everything, build everything simultaneously’ has given way to a more disciplined framework that distinguishes between projects with near-term deliverability and those requiring decade-long patience.

The 2026 budget’s SAR 1.313 trillion in expenditure maintains core commitments to education, health, infrastructure, and quality of life, while the capital expenditure envelope of SAR 162 billion directs real investment into transport, utilities, and urban development. The fiscal trajectory — deficits narrowing from 5.3% of GDP in 2025 to a projected 3.3% in 2026 and 2.2% by 2028 — reflects a government managing a complex balancing act between ambition and sustainability.

For the mega-projects, the honest picture is nuanced: THE LINE is on hold; Red Sea Global is pausing Phase 2; Trojena faces revised timelines. But Qiddiya is opening world-class attractions. King Salman International Airport is under active construction. ROSHN is delivering homes. Diriyah is drawing tourists. And the USD 900 billion project pipeline, even at reduced pace, remains the largest such programme on earth.

The fundamental thesis of Vision 2030 — that Saudi Arabia can build a diversified, non-oil economy with tourism, entertainment, technology, and manufacturing at its core — is being tested by fiscal reality. The evidence so far suggests that while the timelines are longer and some concepts more modest than originally envisioned, the direction of travel is genuine and the structural transformation of the Saudi economy is well underway.

Sources & References

All information in this report is drawn from publicly available, authoritative sources:

• Saudi Arabia National Portal — my.gov.sa (2025 State Budget approval and details)

• Saudi Pedia — saudipedia.com (2026 Budget official summary, December 2025)

• Saudi Ministry of Finance — mof.gov.sa (Budget Statement FY 2025 official document)

• KPMG Saudi Arabia — kpmg.com (Saudi Arabia Budget Report 2026, December 2025)

• Arab Gulf Business Intelligence (AGBI) — agbi.com (2026 budget; PIF spending cuts; giga-project tracker; Red Sea Global)

• Arab Gulf States Institute (AGSI) — agsi.org (2026 budget analysis, December 2025)

• Arab News — arabnews.com (Knight Frank giga-projects report; contract awards $196bn, October 2025)

• MEED — meed.com (2026 budget approval; FIFA 2034 stadiums; giga-projects Q1 2026 report)

• Construction Week Online — constructionweekonline.com (NEOM updates July 2025; cancelled contracts tracker)

• MEP Middle East — mepmiddleeast.com (NEOM March 2026 update)

• House of Saud — houseofsaud.com (NEOM 2026 status; PIF analysis; giga-projects explainer; Vision 2030)

• The Middle East Insider — themiddleeastinsider.com (Saudi giga-projects list 2026)

• Blooloop — blooloop.com (Saudi giga-projects comprehensive guide, February 2026)

• Middle East Briefing — middleeastbriefing.com (2026 budget construction sector implications)

• Gulf International Forum — gulfif.org (Rebalancing Ambition: Saudi Arabia’s megaproject pivot)

• Airport Technology — airport-technology.com (King Salman International Airport project profile)

• ArchDaily — archdaily.com (King Salman Park, February 2026)

• Gulf Business — gulfbusiness.com (PIF 2026-2030 strategy, February 2026)

• CIWEM — ciwem.org (Saudi Arabia water sector and 2034 World Cup)

• Construction Week Saudi — constructionweeksaudi.com (2034 FIFA World Cup stadiums)

• New Arab — newarab.com (Red Sea Global scale-back, February 2026)

• Gulf News — gulfnews.com (KSIA 40-million-passenger terminal; Jeddah airport record passengers)

• IMF — imf.org (2024 Article IV Consultation; fiscal breakeven oil price estimates)

This report is compiled from publicly available official and credible press sources as of May 2026. All figures are as reported at time of publication. Currency conversions are approximate (1 USD = approximately 3.75 SAR). This document may be freely reproduced with attribution.

Sources: Saudi Ministry of Finance, Saudi National Portal, MEED, Arab News, AGBI, Knight Frank, Construction Week, KPMG. Published May 2026.