The furniture industry in Saudi Arabia, which has shown remarkable growth over the recent years, is forecast to post compound annual growth rate (CAGR) of around 11.8 percent during 2010-2013 - one of the highest globally, RNCOS said in its new research report “Saudi Arabia Furniture Market Analysis” on Friday. The positive forecast was made against the backdrop of a robust construction industry which was seen to grow by nearly seven percent in 2010, fuelled by billions of dollars of projects either in the pipeline or currently under way. Business Monitor International is forecasting nearly seven percent growth in the kingdom's construction sector in 2010, fuelled by billions of dollars of projects either in the pipeline or currently under way. According to BMI's Key Projects Database, $80 billion worth of infrastructure projects are currently under way in the county. Based on the number of ongoing projects, BMI analysts said that they are optimistic for the medium term outlook for Saudi Arabia with average real growth of 4.13 percent forecast per year between 2010 and 2014. The report said that although not exactly booming, considering the size of the industry, it is strong growth. Industry value is forecast to rise from SR92.2 billion to SR122.48 billion over the same time period. RNCOS said in its study that increasing population, surging income levels, emergence of western style furniture products and construction boom have resulted in an ever growing furniture industry, it said. The industry almost bucked the post- recessionary negative impacts and sustained positive year-on-year growth in 2009. The report has revealed that the fast economic developments have raised income levels of the population. Per capita income of Saudi residents has substantially grown over the past few years and consequently, the disposable income has amplified. It is expected that per head disposable income will surpass $7,000 by 2013, which will increase consumers spending on life style and household products including furniture and IDC & fit-outs Moreover, the Saudi Arabian furniture industry is witnessing a huge demand-supply gap due to massive in-efficient and underdeveloped wood products industry. The report said domestic manufacturers are facing shortage of furniture raw material and parts, therefore, huge imports become inevitable. However, it is expected that dependence on imports will reduce in future as various international furniture giants are establishing their roots in the Kingdom and raw material supply is getting government focus. On interior design contracting & fit-out front, the residential sector will experience the highest spending among the prominent segments. The sector will register around $2.6 billion worth of interior design contracting and fit-out spending by 2013 on account of various factors. BMI said the buoyant prognosis is couched in strong fundamentals for continued demand for construction projects, from housing to transport. Saudi Arabia's strong native population is a key factor behind the stable and growing demand for infrastructure in the country. Another integral element is the government's commitment to infrastructure investment and its ability to support these plans with funding. BMI analysts said that with the capital to back up projects running into the billions, planned infrastructure projects are likely to be pushed through even if private financing is unavailable. The Saudi Arabia's construction sector grew by 4.71 percent in 2009, citing data from the Saudi Arabian Monetary Agency, above BMI's estimates for the Kingdom. The report said that this strong growth in the face of difficult access to credit and a global recession illustrates just how resistant the Saudi Arabian construction industry is. Compared to many other countries in the region which rely on demand from expatriates or the tourism sector, Saudi Arabia's infrastructure projects are in response to actual, sustainable demand from a native population. It said that housing would be one of the strongest sectors going forward, as the government plans to invest heavily in affordable housing to meet a substantial shortfall in units.
