RIYADH: Saudi Arabia’s Construction Cost Index increased 2.7 percent year on year in June, driven by higher equipment rental and labor costs in both the residential and non-residential sectors, official data showed.
According to the latest report by the General Authority for Statistics, construction costs in the residential sector rose 2.6 percent annually in June, while the non-residential sector recorded an annual increase of 3.1 percent.
According to an April IMARC Group forecast, the Kingdom’s construction market is projected to reach $140.4 billion by 2034, growing at a compound annual growth rate of 3.6 percent during 2026-2034.
In its latest report, GASTAT stated: “CCI for the residential sector recorded an annual increase of 2.6 percent. This was driven by a 4.5 percent increase in the costs of renting equipment and machinery, driven by a 6.2 percent increase in the costs of renting equipment and machinery with operators.”
In the residential sector, labor costs rose 2.5 percent, energy prices increased 3 percent, and the cost of basic materials rose 1.8 percent.
GASTAT added that the rise in the cost of basic materials was driven by a 3.8 percent increase in the prices of timber and joinery, along with a 2.8 percent increase in other building materials.
Non-residential sector
According to the report, construction costs in the non-residential sector rose 3.1 percent year on year. This increase was primarily due to a 6.7 percent increase in the cost of renting equipment and machinery, reflecting an 8.4 percent increase in rentals with operators.
Energy and labor costs each climbed 3 percent, while the cost of basic materials rose 1.9 percent, reflecting a 4 percent increase in other building materials and a 2.4 percent increase in timber and joinery prices.
Monthly analysis
On a monthly basis, the overall CCI edged up 0.1 percent in June compared with May.
Both the residential and non-residential sectors contributed to this modest monthly gain, each posting a 0.1 percent increase.
The CCI tracks changes in construction input costs across 51 items, with prices collected monthly from the Kingdom’s 13 regions through field surveys of contractors, engineering firms, and construction material suppliers.
The index, which uses 2023 as its base year, is published monthly.
Saudi Arabia’s sustained construction boom aligns with broader Gulf Cooperation Council trends, as countries across the region accelerate economic diversification to reduce their dependence on oil.
