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Jeddah - Yasmine El Tohamy - RIYADH: Saudi Arabia’s Construction Cost Index rose 2.4 percent year on year in April, driven by higher equipment rental and labor costs, with both residential and non-residential sectors recording increases, official data showed.
According to the General Authority for Statistics, residential construction costs climbed 2.4 percent annually, while the non-residential sector witnessed a price rise of 2.7 percent.
The increase comes as Saudi Arabia presses ahead with large-scale infrastructure and tourism developments under its Vision 2030 diversification strategy, including Neom, Qiddiya and the Red Sea Project, which continue to drive demand for contractors, machinery and building materials.
“CCI for the residential sector recorded an annual increase of 2.4 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.
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.
In the residential sector, energy prices recorded an annual increase of 3 percent, while labor costs increased by 2.8 percent.
Basic materials saw a more modest 1.2 percent increase in the residential segment, with timber and joinery prices jumping 3.3 percent and plastic and glass products advancing 2.1 percent.
In the non-residential sector, equipment and machinery rental surged 6.7 percent, boosted by an 8.5 percent rise in rental of equipment and machinery with operators.
Labor and energy expenses in the non-residential sector both increased by 3 percent, while basic material prices advanced by 1 percent, driven by higher prices for timber, joinery, plastic, and glass products.
On a monthly basis, the CCI increased 0.5 percent in April compared to March, driven by 0.5 percent gains recorded in both the residential and non-residential sectors.
The CCI tracks changes in construction input costs across 51 items, with prices collected monthly from 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.
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 2025, property consultancy Knight Frank forecast that the Kingdom’s construction output would reach $191 billion by 2029, reflecting a 29 percent increase compared to 2024.
In an April report, market research firm IMARC Group projected Saudi Arabia’s construction market would be valued at $140.4 billion by 2034, representing a compound annual growth rate of 3.6 percent from 2026.
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