Construction Compliance in Saudi Arabia: Key Regulations to Know in 2025
Find out the key construction regulations in Saudi Arabia required for a smooth market entry.
Understanding the regulations for foreign construction companies in Saudi is crucial to ensuring compliance with Saudi construction industry laws and taking advantage of the full breadth of growth opportunities presented by the local market.
This article provides an overview of the key regulations governing commercial activities in the Saudi construction industry, set to be the biggest on earth in terms of value and project pipeline by 2028.
Download the Construction Guidebook by AstroLabs to gain further insights into the construction regulatory and licensing landscape in Saudi
Construction Regulations in Saudi To Know About
The Saudi Building Code
One main factor contributing to Saudi Arabia’s massive construction industry is the Saudi Building Code, a comprehensive framework guaranteeing construction quality across the Kingdom's diverse geographical landscape.
This code, implemented through Council of Ministers Resolution No. 279, has evolved into a sophisticated system encompassing everything from administrative requirements to technical specifications. It addresses architectural standards, structural specifications, electrical regulations, mechanical guidelines, and crucial aspects such as fire protection and energy conservation.
The code's implementation has followed a carefully planned trajectory, with its fifth and final phase initiated in July 2022. This phase brings all building types under the code's purview, including specialized facilities such as warehouses and parking structures. The gradual implementation has allowed the industry to adapt while maintaining high standards of construction quality and safety.
As part of the Saudi Building Code, the Kingdom also implemented a Green Building Code that addresses critical sustainability requirements across several key areas: site development, land use, material resource conservation, and energy efficiency.
This component of the building code reflects Saudi Arabia's pledge to sustainable construction practices, making sure new developments meet modern environmental standards while supporting the Kingdom's broader sustainability goals.
A New Civil Transactions Law (NCTL)
Another significant development is the New Civil Transactions Law (NCTL), which came into effect in December 2023. This landmark legislation is meant to bring clarity to civil transactions, including construction contracts.
For the first time, construction companies have explicit guidelines regarding contract formation, validity, and enforcement. The NCTL introduces crucial concepts such as force majeure provisions and establishes a clear framework for dealing with contractual disputes.
Particularly relevant for construction companies is the NCTL's treatment of damages and compensation. The law recognizes both material and emotional damages.
It also establishes a ten-year statute of limitations for legal claims, bringing Saudi Arabia in line with international standards and providing businesses with greater certainty in their operations.
The AstroLabs’ Construction Guidebook offers first-hand insights that can help companies unlock the efficiencies of a successful Saudi market entry plan
Expanding to Saudi: What Global Construction Companies Should Know?
For global construction companies looking to enter the Saudi market, the journey begins with obtaining the appropriate licenses.
The Ministry of Investment (MISA) offers various license categories tailored to different business activities. These include service licenses, real estate licenses, consulting licenses for engineering offices, professional licenses, and industrial licenses. Each category has specific requirements and benefits, allowing companies to choose the most appropriate structure for their operations.
To complete the licensing procedures, construction companies must register with the Saudi Contractors Authority (SCA). Engineering professionals and companies obtain necessary registration with the Saudi Engineering Council (SEC).
The new investment law, set to take effect in 2025, will require foreign contractors in Saudi to complete simple registration with MISA instead of acquiring an investment license.
As specialists in the field, AstroLabs’ team helps global businesses keep abreast of the recent regulatory and industry developments as part of the expansion business platform’s incorporation services.
Beyond company registration, AstroLabs offers comprehensive post-incorporation offerings to ensure the business’ ongoing compliance with the country’s business and employment roles.
Compliance with statutory requirements in Saudi provides a solid foundation for the business to operate confidently and achieve the desired outcomes.
Navigating the Saudi construction regulatory landscape requires expert guidance. The timely support offered by AstroLabs’ on-the-ground team throughout various stages of the incorporation process allows for the seamless establishment of a successful venture with the proper knowledge and perseverance.
