Saudi Arabia’s Construction Cost Index edged up 0.2 percent in May from the previous month, reflecting relatively stable pricing across the Kingdom’s building sector, official data showed.

According to the latest report by the General Authority for Statistics, the index was 2.6 percent higher than a year earlier, driven by increased equipment rental, labor, and energy costs in both the residential and non-residential sectors.

Residential construction costs climbed 2.5 percent annually, while the non-residential sector recorded a stronger 3 percent increase.

The increase comes amid Saudi Arabia’s ongoing push for major infrastructure and tourism projects under its Vision 2030 economic diversification plan.

Flagship developments such as Neom, Qiddiya, and the Red Sea Project continue to generate strong demand for contractors, machinery, and building materials.

“CCI for the residential sector recorded an annual increase of 2.5 percent as a result of a 4.7 percent rise in the cost of renting equipment and machinery, driven by a 6.3 percent increase in the rental of equipment and machinery with operators,” said GASTAT.

In the residential sector, labor costs rose 2.5 percent, while energy prices increased by 3 percent.

Basic materials costs went up 1.6 percent year on year, with timber and joinery prices rising 3.6 percent and other building materials increasing 2.6 percent.

The non-residential sector’s 3 percent annual increase was driven by a 6.7 percent rise in equipment and machinery rental costs, propelled by an 8.5 percent increase in rentals with operators.

Both labor costs and energy prices increased by 3 percent year on year across the sector in May.

Basic materials costs also rose 1.6 percent, with other building materials increasing 3.7 percent and timber and joinery products rising 2.3 percent.

“This (monthly increase) is mainly attributed to a 0.2 percent rise in costs for the residential sector and a 0.3 percent increase in costs for the non-residential sector,” added GASTAT.

This increase in construction costs comes amid signs of moderation in Saudi Arabia’s real estate market, particularly in the residential sector. The Kingdom’s real estate price index declined 1.6 percent year on year in the first quarter, largely due to a 3.6 percent drop in residential property prices.

The sustained momentum in Saudi Arabia’s construction sector mirrors broader trends across the Gulf Cooperation Council, where countries are intensifying efforts to diversify their economies away from oil dependence.

In an April report, market research firm IMARC Group projected that Saudi Arabia’s construction market will reach $140.4 billion by 2034, representing a compound annual growth rate of 3.6 percent from 2026.
  
Source: arabnews.com