Prime Highlight
- Saudi Arabia’s construction costs saw no change in December, maintaining a 1.1% year-on-year increase for the second consecutive month.
- Stable costs reflect steady prices for materials, equipment rentals, and ongoing large-scale development projects under the Kingdom’s economic diversification strategy.
Key Facts
- The Construction Cost Index reached 101.8 points in December, with both residential and non-residential sectors rising 1.1% year on year.
- Energy prices jumped 9.9%, labor and equipment costs rose modestly, and basic material prices increased slightly, including cement, concrete, wood, and glass.
Background
Construction costs in Saudi Arabia maintained a steady pace in December, with annual growth holding at 1.1 percent for the second consecutive month. This was due to stable prices for materials and equipment rentals.
According to data from the General Authority for Statistics (GASTAT), the Kingdom’s Construction Cost Index reached 101.8 points in December. The index remained unchanged compared to November on a monthly basis and matched the year-on-year increase recorded in the previous month.
The stable trend comes as Saudi Arabia continues to push large-scale development projects under its economic diversification strategy. Across the Gulf Cooperation Council, governments are increasing spending on infrastructure to reduce reliance on oil and gas revenues.
GASTAT said the annual rise in construction costs was driven by equal increases in both residential and non-residential sectors. Construction costs in each sector rose by 1.1 percent compared to December last year.
In the residential sector, labor costs increased by 1.7 percent year on year. Equipment and machinery rental costs rose by 1.3 percent, while energy prices jumped sharply by 9.9 percent. Prices of basic construction materials edged up by 0.2 percent, led by a 1.2 percent rise in cement and concrete and a 0.9 percent increase in plastic and glass products.
Non-residential construction showed a similar trend. Labor costs rose by 1.5 percent, and equipment rental expenses increased by 1.3 percent compared to a year earlier. Basic material prices climbed by 0.3 percent, driven by higher costs for wood, carpentry, plastic and glass. Energy prices also rose by 9.9 percent.
On a monthly basis, GASTAT said overall costs remained stable in December due to little change in residential construction inputs. Non-residential costs rose slightly by 0.1 percent, mainly due to higher labor expenses.
Looking ahead, real estate consultancy Knight Frank expects Saudi Arabia’s construction output to reach $191 billion by 2029, supported by housing demand, giga-projects and the rising need for office space.
The Construction Cost Index tracks 51 cost items across 13 regions and uses 2023 as its base year.
