How Can Foreign Businesses Secure Construction Licenses in Saudi Arabia?
This article delves into the various types of Saudi construction licenses by MISA that foreign businesses should secure before pursuing operations in the Kingdom.
Acquiring a Saudi construction license from the Saudi Ministry of Investment (MISA) forms the bedrock of the market expansion process and foreign business setup and represents a key area of compliance in the Kingdom.
Once the incorporation process is completed, individual contractors and companies are in a position to secure a license from the Saudi Contractors Authority (SCA). Meanwhile, engineers intending to practice engineering in Saudi Arabia must have a license from the Saudi Engineering Council (SEC).
Download AstroLabs' Construction Sector Guidebook, for a detailed insight into various types of licenses available for foreign construction companies looking to establish operations in Saudi Arabia.
Construction Licenses in Saudi Arabia and Key Requirements
Foreign construction companies should consider the business's long-term objectives and service delivery scope before proceeding with the process of selecting the appropriate license.
1. Service License
The service license represents one of the most versatile options for foreign construction companies, encompassing a broad spectrum of business activities.
Scope:
- Administrative investment
- Information technology solutions
- Tourism-related construction
- Training and development
- Healthcare facility construction
- Insurance and reinsurance services
- Educational institution development
- Advertising and media infrastructure
- Logistics and supply chain facilities
- Exhibition center construction
- Catering and food service facilities
- Financial service structures
- Aviation and handling facilities
2. Industrial License
The industrial license plays a pivotal role in Saudi Arabia's industrial development strategy, particularly in the construction sector.
Scope:
- Heavy industrial construction projects
- Light industrial facility development
- Transformative industrial installations
- Manufacturing plant construction
- Industrial infrastructure development
3. Real Estate License
This specialized license category caters to foreign companies focusing on substantial real estate development projects within the Kingdom.
The total project cost, including both land and construction, should not be less than SAR 30 million, and the investment is located outside the boundaries of the cities of Mecca and Medina.
Scope:
- Large-scale residential developments
- Commercial property projects
- Mixed-use development initiatives
- Infrastructure development projects
4. Consulting License for Engineering Offices
This license caters to foreign companies that seek to offer engineering consultation services within the Kingdom with 100% ownership.
Scope:
- Architectural consulting
- Structural engineering services
- MEP consulting
- Project management consulting
- Environmental impact assessment
- Technical feasibility studies
5. Professional License
This license is available to foreign companies wishing to engage in professional activities inside the Kingdom with a Saudi partner.
Scope:
- Specialized construction services
- Technical consulting
- Project management
- Quality control and inspection
- Construction supervision
- Safety and compliance monitoring
Depending on the type of activity and service scope, businesses must secure third-party approval from concerned authorities and ministries. For instance, a construction tech company might require approval from the Ministry of Communications and Information Technology.
Effective Strategies for Saudi Construction License Selection and Setting Up a Business
Seizing opportunities in the dynamic construction sector, set to be the largest worldwide by 2028, requires a proactive approach to market entry and post-business setup processes—one that ensures business needs are met from the very initial formation to corporate growth, eventually making the expansion into the Saudi market smoother and more effective.
After acquiring the MISA license, companies must get their AoA and commercial registration issued—crucial steps in the initial phases of foreign business setup in Saudi.
Utilizing its years of know-how in company formation, the AstroLabs team helps overseas businesses expedite the attainment of these foundational documents.
A successful market expansion encompasses remaining in full compliance with the country's regulations throughout the business life cycle. As part of its efforts to provide optimum support at every stage of the market expansion, the AstroLabs team enables companies to stay on top of compliance-related areas, such as portal management, Saudization, and MISA license renewal.
Over the past decade, the business expansion platform has become an instrumental catalyst in propelling the market entry process for 650 global firms across different industries in the Kingdom.
Within construction, more than 100 companies have expanded to Saudi via AstroLabs. Examples include CPG Corporation (Singapore), Waagner Biro Steel and Glass (Austria), Grankraft (UAE), and Konn Technologies (Jordan).
Why Saudi is the Default Location for Overseas Construction Businesses
For high-growth construction companies, operating in the Kingdom is like hitting the bull's eye for continued business growth and expansion. The opportunities are apparent nationwide, including in large-scale building initiatives such as giga projects, valued at $1.3 trillion.
Cities like Qiddiya, ROSHN, Diriyah Gate, NEOM, Amaala, and the Red Sea are together reshaping the tourism infrastructure development in the country, accounting for 73% of the hotel construction pipeline.
The Construction Guidebook thoroughly examines the multi-faceted impact of the construction sector in driving sustainable development in ancillary industries such as hospitality, tourism, and events.
Richly detailed with firsthand insights, it provides a comprehensive outlook of key infrastructural projects where opportunities abound for global businesses.
In terms of events, the Kingdom has been making waves on the international stage as a host of many renowned entertainment and business events as well as sports tournaments.
Saudi Arabia’s meetings, incentives, conferences, and exhibitions (MICE) industry is projected to hit $5 billion by 2031, becoming a crucial driving force behind construction resurgence in Saudi.
As a result, this heightened engagement—such as the Saudi seasons—is driving up the demand for hotel accommodation and entertainment centers as well as tourist attractions to keep pace with record surges seen in domestic and global visitor inflows.
Further, the country's ongoing preparations to host Riyadh Expo 2030 and the 2034 FIFA World Cup present a compelling case for domestic and foreign investors looking for returns on their capital.
In the context of the 2034 FIFA World Cup, Saudi Arabia has embarked on what's believed to be the biggest sports facility construction wave ever recorded. The 2034 FIFA World Cup will witness matches held in a total of 15 stadiums across five host cities.
This brings forth a multitude of opportunities for contractors and developers. These opportunities span everything from architecture, sustainable construction practices, manufacturing, state-of-the-art technologies, and consulting.
