KSA CONSTRUCTION

COST BENCHMARKING
REPORT 2025 Stonehaven.ae
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SAUDI ARABIA
Equally critical is addressing labour shortages.
Collaborative initiatives between public and private

IN 2025
sectors are creating a sustainable talent pipeline
through targeted training and upskilling. These
efforts are essential for meeting the demands of
Saudi Arabia’s ambitious mega-developments.

Seizing the Opportunities of 2025

Giga Projects Drive Labour
Demand to New Heights To succeed in 2025, real estate professionals need to
adopt strong project management frameworks and
Saudi Arabia’s construction market is undergoing a smart procurement strategies. With comprehensive
historic transformation, driven by Vision 2030’s risk and cost controls at the core, these approaches
ambitious goals. With over $1.7 trillion in projects are essential for managing the challenges of
under development, the opportunities are vast, but giga-projects while creating spaces that deliver
navigating them requires careful planning and value, sustainability, and innovation.
strategic decision-making. This report provides a
focused analysis of the key trends, challenges, and
opportunities that are shaping the industry in 2025. Driving Real Estate Transformation
Saudi Arabia’s leadership in real estate
transformation relies on collaboration, technological
Setting the Stage for 2025
advancement, and sustainability. By facilitating
Giga-projects such as NEOM and The Red Sea Project these principles, the Kingdom is poised to achieve its
are transforming Saudi Arabia into a global leader in ambitious Vision 2030 goals. Together, these efforts
real estate development. However, these ambitious can ensure that 2025 is a pivotal year in realising a
projects bring significant challenges. Labour future-ready nation.
shortages, material constraints, and rising costs are
straining timelines and budgets. Labour alone
accounts for approximately 40% of total project Empowering Growth
expenditures, highlighting the necessity of efficient
At Stonehaven, we understand the challenges and
workforce management and logistical planning.
opportunities that come with Saudi Arabia's
Addressing these challenges effectively is critical to
giga-projects. Using our deep expertise in project
maintaining operational success and delivering on
and cost management, we’re here to help drive the
Vision 2030 objectives.
Kingdom’s bold real estate transformation and
shape a sustainable and innovative future.

Technology and Training

The construction industry in 2025 demands efficiency
through innovation and advanced techniques. Key
technologies leading the transformation include:

Building Information Modelling (BIM):

Enhancing collaboration and minimising costly
errors.

Modular Construction:
Reducing waste while accelerating project
timelines.

Gordon Rodger
AI-Powered Tools:
Managing Director
Streamlining resource allocation and
mitigating risks. [email protected]

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KSA MARKET
Saudi Arabia's real estate sector plays a crucial role in
the Kingdom's expanding construction industry and is

OVERVIEW AND
integral to the country's economic diversification
strategy as outlined in Vision 2030. In 2023, the nation
awarded contracts amounting to approximately $94

TRENDS
billion, demonstrating a significant increase compared
to previous years. This upward trend continued into
2024, with contract awards reaching a record high of
$146.8 billion, reflecting the Kingdom's steadfast
commitment to large-scale development projects.

Key Segments Driving Real Estate Investments:

Residential Sector : In Q1 2024, the sector secured Leisure Sector : Significant investments in
21 projects valued at $2.1 billion, with a substantial leisure projects are further boosting the
focus on residential developments. growth of the real estate market.

Growth in Project Awards Breakdown of Saudi Arabia’s

The Kingdom has experienced remarkable growth in
Pipeline Value
project awards over recent years, with real estate
leading this growth. This upward trend underscores

$582 BILLION
Saudi Arabia’s focus on transformative developments,
solidifying its role as a regional leader in construction
and innovation.

Transportation, Infrastructure, and Utilities

A Strong Pipeline for the Future

$950 BILLION
Despite global economic uncertainties, Saudi Arabia
boasts a robust pipeline of future projects. With a
commanding $1.5 trillion share, the Kingdom accounts
for 39% of the total MENA pipeline value of $3.9 trillion. Construction (Assets)

MENA Regional Pipeline Distribution:

Saudi Arabia Other GCC Countries Saudi Arabia’s commitment to transformative projects
$1.5 trillion $600 billion under Vision 2030 continues to set a benchmark for
regional growth, reinforcing its position as a leader in
UAE Other MENA Countries real estate and construction.
$590 billion $1.2 trillion

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COMMODITIES AND
CONSTRUCTION COST DRIVERS
Global Commodity Price Trends
The World Bank forecasts a 5% decline in global commodity prices for 2025, building on a 3% decrease recorded in
2024. While prices are trending downward, they are projected to remain around 30% higher than pre-pandemic
levels, reflecting sustained elevated costs compared to the 2015–2019 average.

Oil Prices Trends & Projections:

• 2024 Trend: In 2024, Brent crude oil prices remained 84

relatively stable, averaging $81 per barrel.

82
Throughout the year, prices fluctuated within a

Price (USD per barrel)

narrow range, peaking at $93 per barrel in April and
$81
80

dropping to a low of approximately $69 per barrel in 78

September. 76

74
• Projections: Analysts predict that the average price
of Brent crude oil will be approximately $74 per barrel 72 $74
throughout 2025, representing a slight decline from 70
2024 (Average) 2025 (Projected)
the 2024 average of $81 per barrel. Time Period

Base Metals:

• 2024 Trend: In 2024, base metal prices exhibited 14000

6.5%
mixed trends. The World Bank reported an overall
16000
increase of nearly 4% year-over-year, despite a
3.6%
7% decline in the third quarter due to slowing 14000
Projected Price (USD per tonne)

industrial activity in major economies.

12000

Price Change (%)

Specific Metals: 10000

- Copper prices rose by approximately 12.7%, 8000

-1.2%
averaging $4.30 per pound.
6000
- Aluminum saw a 15.6% increase, averaging $1.15
per pound. 4000

- Nickel experienced a modest gain of 1.3%, with an

average price of $7.69 per pound.
2000 -6.4%
- Zinc reached an average price of $2,779 per 0
Copper Aluminum Nickel Zinc
metric ton, marking a significant annual increase
Metals
of 13%.

• Projections: Base metal prices are exhibiting varied trends, influenced by factors such as supply constraints,
geopolitical developments, and shifts in industrial demand.

Here's an overview of key base metals:

- Copper - Expected to average $9,825/tonne, driven by supply constraints.

- Aluminum - Forecasted to rise to $2,700/tonne.
- Nickel - Projected to average $16,750/tonne, remaining under pressure.
- Zinc - Expected to drop to $2,600/tonne due to increased supply.

Overall, the World Bank projects a slight decline of 0.9% in the metals and minerals price index for 2025.

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CONSTRUCTION MARKET DYNAMICS

IN SAUDI ARABIA
Saudi Arabia's construction sector is experiencing sustained growth, fuelled by Vision 2030 initiatives and
substantial investments in infrastructure development.

Market Growth:
• Industry Overview: As of 2024, Saudi Arabia • Projections: The construction market is expected
leads global construction activity with a project to grow at a compound annual growth rate
pipeline valued at approximately $1.5 trillion, (CAGR) of 5.37%, reaching $91.36 billion by 2029.
encompassing various sectors including
residential, commercial, and infrastructure
developments.
$1.5T
Construction Pipeline

$91.36B
Market Value by 2029 (Projection)

5.37%
CAGR (Projection)

Material Availability and Costs: Saudi Construction Market Growth & Drewry Shipping Costs (2021-2025)

10000 90

Current Trends:
Drewry World Container Index (USD per 40ft container)

Saudi Construction Market (Billion USD)

9000 85
Saudi Arabia's construction sector continues to
exhibit stability in the face of global supply chain 8000
80
disruptions. The industry strategically relies on
7000
imports while simultaneously enhancing local 75
manufacturing capabilities. Shipping costs are 6000
subject to fluctuations; as of January 2025, Drewry's 70
Index indicates a cost of $3,445 per 40-foot 5000

container, which has implications for overall project

65
expenses. Furthermore, the Vision 2030 initiatives 4000

are designed to bolster domestic production and

3000 60
reduce reliance on foreign materials, supporting
the long-term growth of the sector. 2021.0 2021.5 2022.0 2022.5 2023.0 2023.5 2024.0 2024.5 2025.0
Year

Steel & Construction Global Production and Demand:

Current Trends: Commodity Supply Prices

Global steel production saw a decline of 0.9% in 2024; • Aluminium: $2,179/t (-3%, -$70/t)
however, demand is anticipated to rise by 1.9% in 2025, • Copper: $8,300/t (-2%, -$167/t)
primarily driven by developments in the MENA region. This • Iron Ore: $124/dmt (+18%, +$23/dmt)
growth is underpinned by substantial infrastructure projects
• KSA Rebar: SAR 2,350/t (0%, SAR 0)
and an increase in residential construction. Notably, steel
demand in MENA is expected to grow by 3.8% in 2025, • OPEC Oil: $83/barrel (+5%, +$4/barrel)
reflecting a positive trajectory for market recovery.

These trends underscore the dynamic nature of the commodity and construction markets, with Saudi Arabia
playing a pivotal role in regional development and economic diversification efforts.
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KSA BUILDING ASSET COSTS & BENCHMARKING

Construction costs in the Middle East and Asia continue to remain elevated following the COVID-19 pandemic. In
2024, the Middle East experienced a general cost increase of 4%. Within this region, Saudi Arabia reported an
increase between 3.4% and 4.2%, while the United Arab Emirates saw a rise of 2% to 3%. In Asia, inflation averaged
4%. Looking ahead to 2025, costs are expected to remain high, with inflation in Asia projected to be approximately
3.8% and ongoing growth anticipated in Saudi Arabia.

Several factors contribute to this upward trend:

Supply Chain Disruptions: Global events have led to material shortages and increased lead times,
affecting project schedules and budgets.

Labor Shortages: High demand for skilled labor, coupled with regional challenges, has intensified
competition and driven up wages.

Inflationary Pressures: Rising costs of raw materials and energy have further strained project budgets.

Geopolitical Tensions: Regional conflicts and political instability have introduced uncertainties,
impacting investor confidence and project timelines.

Climate Change and Extreme Weather: Increasingly severe weather conditions have disrupted
construction activities and necessitated additional design considerations for resilience.

Despite these challenges, the Middle East and Asia continue to see a robust pipeline of projects in key sectors such
as infrastructure, renewable energy, and high-tech manufacturing. This rapid development is adding pressure to
existing supply chains, which may lead to further cost escalations and resource constraints in 2025.

Our Approach to Mitigating Risks

As RICS Chartered Quantity Surveyors, we work closely with our clients to establish clear design and budget
objectives right from the start. Early planning is key to minimising the impacts of market volatility and ensuring
project success.

Our strategies include: • Leveraging Project and Cost Management Expertise: We guide clients
in maintaining strict adherence to budgets and timelines, ensuring
financial stability and project viability at every stage.
• Maximising Value During the Design Phase: By focusing on value
engineering, we help optimise costs while preserving the quality and
integrity of the project.
• Customising Procurement and Contractual Strategies: We tailor
procurement methods to the specific needs of each project, enhancing
efficiency, reducing risk, and achieving cost-effectiveness.

By aligning our expertise with your goals, we ensure that your projects remain resilient, value-driven, and built for
long-term success.

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CONSTRUCTION COSTS BENCHMARKING

Category Low High
(SAR / m²) (SAR / m²)

Hospitality 0 0
3-Star Hotel 7,450 9,700
4-Star Hotel 9,500 12,500
5-Star Hotel 12,400 18,000
Commercial - -
Low-rise Office (Shell & Core) 5,050 6,600
Mid-rise Office (Shell & Core) 6,000 7,850
High-rise Office (Shell & Core) 7,500 10,150
Office Fit-out - Basic 3,450 5,600
Office Fit-out - Medium 5,400 8,300
Office Fit-out - High 7,350 10,400
Office Fit-out - Premium 8,600 11,650
Residential - -
Low-rise Apartments (G+4) 4,550 6,100
Medium-rise Apartments (G+12) 5,900 7,500
High-rise Apartments (G+40) 7,400 10,000
Villas Standard 4,100 5,200
Villas Mid-Market 4,900 7,900
Villas Luxury 8,500 14,900
Villas Super Luxury 14,700 21,000
Retail - -
Community Malls (Shell & Core) 5,250 6,950
Regional Mall (Shell & Core) 6,700 7,500
Large Regional Mall (Shell & Core) 7,300 9,350
Shop Fit-out - Basic 2,650 3,800
Shop Fit-out - Medium 3,700 6,300
Shop Fit-out - High 6,200 8,250
Shop Fit-out - Premium 8,100 11,650
Schools - -
Traditional Design 6,100 8,100
Moderate Design 8,000 9,800
Progressive Design 9,500 12,800
Car Parking - -
Multi-Storey (BUA m²) 2,600 3,700
Basement (BUA m²) 3,600 4,600
Food & Beverage - -
Restaurant Fit-out - Standard 6,000 7,800
Restaurant Fit-out - Mid-Market 7,700 10,900
Restaurant Fit-out - High-End 10,800 12,600
Restaurant Fit-out - Premium 12,500 18,800
Airport Lounges - -
Lounge Fit-out - Mid-Market 5,100 7,600
Lounge Fit-out - High-End 6,800 8,500
Lounge Fit-out - Premium 8,400 13,000
Landscape - -
Public Parks - Standard (based on total site area) 225 400
Public Parks - Medium (based on total site area) 390 620
Public Parks - High-End (based on total site area) 650 1,200
Industrial & Logistics - -
Light Industrial Unit 3,100 4,100
Logistics Warehouses Facility 5,600 8,700
Infrastructure - -
Road Networks (Highways) 1,150 4,800
Bridges 7,500 15,200
Infrastructure / Utilities (based on total site area) 150 500
Data Centers - -
Small (up to 500 m²) 18,000 30,500
Medium (up to 2,500 m²) 30,450 43,750
Large (up to 10,000 m²) 41,850 57,100

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Definitions: Basis and Assumptions

• Measurement Standards: All square metre (m²) calculations are based on Gross Floor Area (GFA), unless
otherwise specified.

• Cost Ranges:

- Low Range: Reflects a low-to-medium specification standard, benchmarked against verified

projects. Actual costs may vary.
- High Range: Reflects a medium-to-high specification standard, similarly benchmarked.

• Cost Influencers: Factors such as project location, contract type, building design, economies of scale, and
structural solutions significantly impact project costs.

Indicative Rates Disclaimer: The rates provided in this document are indicative only and should not be considered
a substitute for a detailed, project-specific cost estimate.

General Exclusions
The following costs are typically excluded from baseline estimates:

Contributions to third Client finance costs, Land acquisition costs, Developer legal fees,
parties, tenants, or insurance, VAT, and other municipality connection inflation costs,
authorities. taxes. charges, and master professional fees, and
infrastructure fees. specific systems or
finishes, such as TV/AV
systems or loose
furnishings.

General Inclusions
Specific notes for project cost inclusions are as follows:

Hospitality Projects: Landscaping Projects: Retail Projects: Industrial and Logistics

Excludes loose furniture, Rates reflect a blended Tenant fit-out costs are Facilities:
white goods, operating approach, encompassing excluded. Assumes multi-purpose
supplies and equipment hardscape, softscape, facilities, excluding
(OS&E), artwork, and furniture, lighting, and racking systems and
internal planting. associated mechanical, production equipment.
electrical, and plumbing
(MEP) services.

Conclusion
Overcoming the evolving challenges in the construction market demands foresight, expertise, and strong
collaboration. By focusing on design clarity, strategic cost management, and tailored procurement strategies, we
empower our clients to navigate complexities and achieve successful outcomes. As RICS Chartered Quantity
Surveyors, we are committed to delivering value-driven solutions that meet the demands of an ever-changing
industry, ensuring resilience, efficiency, and long-term success for every project.

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Explore key construction statistics for Saudi Arabia, highlighting growth in infrastructure, real estate, and major
projects driving economic development, innovation, and sustainability in this dynamic market.

ELEMENTAL COST SPLIT FOR VARIOUS CONSTRUCTION DISCIPLINES

4-STAR HOTELS LUXURY RESIDENTIALS

REGIONAL MALLS LUXURY VILLAS

17% 5% 5% 12% 14% 16%

11% 8% 10% 13% 21% 23%

Substructure Superstructure Building External

Envelope

4% 7% 12% 20% 11% 7%

4% 4% 11% 13% 2% 3%

Internal Walls Internal Finishes Fittings, Furnishing

and Doors & Equipments

2% 2% 8% 8% 13% 11%

1% 2% 14% 6% 10% 7%

Sanitaryware Mechanical Electrical Services

Services

1% 2.5% 5% 3% 9% 9%

4% 1% 9% 9% 11%

Conveying Landscaping & General

Systems External Walls Requirements

COST DISTRIBUTION BY RESOURCE TYPE MATERIAL WASTAGE PERCENTAGE

BASED ON COST OF MATERIAL
Concrete Steel Reinforcement
Work Cost
Labour
Works Cost
Labour
10%
15% 11%
Equipment
9%
Equipment
5%
8%
Overheads Overheads
5% 6%
8% 9%

Materials Materials

68% 75%
Residential Commercial Infrastructure Industrial

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COMPARATIVE COST ANALYSIS BASED ON SAR / M²

6,700 17,850 15,200

Medium-rise Super Luxury Hospitality
Apartment Villas 5-Star Hotel

8,825 15,650 10,125

Commercial Restaurant Office
High-rise Office Fit-out Fit-out
(Shell & Core) Premium Premium

REGIONAL COST VARIATIONS BETWEEN KSA & UAE

BASED ON USD / M²
Medium-rise Apartment
1,785
1,634
Super Luxury Villas
4,755
6,944
Hospitality 5-Star Hotel
4,049
3,758
Commercial High-rise Office (Shell&Core)
2,351
2,178
Restaurant Fit-out Premium
4,169
3,948
Office Fit-out Premium
2,697
3,131

100%
COST BREAKDOWN BY
90%
PROJECT PHASE
Cumulative Cost (%)

80%

70%

60%

50%

40%

30%

20%

10%

0%
M40

M45

M50

M55
M10

M15

M30

M35
M20

M25
M5
M1

Feasibility & Design Phase (12 Months) Construction Phase (30 Months) Defect Liability Period (12 Months)

Project Phase
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WORLD BANK COMMODITIES

PRICE DATA 2024

Jan-Mar Apr-Jun Jul-Sep Oct-Nov

Commodity Unit 2024 2024 2024 2024

Timber xx xx xx xx xx

Logs, Africa $/m³ 380 377 385 377

Logs, S.E. Asia $/m³ 201 191 200 196

Plywood ¢/sheets 368 351 367 360

Sawnwood, Africa $/m³ 608 605 623 618

Sawnwood, S.E. Asia $/m³ 691 688 709 703

Other Raw Materials xx xx xx xx xx

Cotton $/kg 2 2 2 2

Rubber, RSS3 $/kg 2 2 2 2

Rubber, TSR20 $/kg 2 2 2 2

Metals and Minerals xx xx xx xx xx

Aluminum $/mt 2,199 2,523 2,381 2,589

Copper $/mt 8,444 9,751 9,198 9,305

Iron Ore $/dmt 123 113 100 101

Lead $/mt 2,074 2,166 2,034 2,011

Nickel $/mt 16,627 18,416 16,235 16,245

Tin $/mt 26,218 32,262 31,608 30,834

Zinc $/mt 2,446 2,834 2,776 3,055

Energy xx xx xx xx xx

Coal, Australia $/mt 127 137 141 144

Coal, South Africa $/mt 106 105 106 107

Crude Oil, Average $/bbl 81 84 78 73

Crude Oil, Brent $/bbl 83 85 80 75

Crude Oil, Dubai $/bbl 82 85 78 74

Crude Oil, WTI $/bbl 77 81 75 71

Natural Gas, Index (100=2010) Index 77 81 89 98

Natural Gas, Europe $/mmbtu 9 10 12 13

Natural Gas, U.S. $/mmbtu 2 2 2 2

Liquefied Natural Gas, Japan $/mmbtu 14 12 13 13

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KSA COMMODITY PRICES 2024

Quarterly Averages

Jan-Mar Apr-Jun Jul-Sep Oct-Dec

Jan-Mar Apr-Jun Jul-Sep Oct-Dec
2024 % Diff. 2024 % Diff. 2024 % Diff. 2024 % Diff.
Commodity 2024
from previous
2024
from previous
2024
from previous
2024
from previous
(SAR) (SAR) (SAR) (SAR)
month month month month

Concrete (C40) 0 0 0 0 0 0 0 0

Supplier A Supply rate per m³ 220.00 0.00% 227.60 3.45% 233.00 2.37% 244.00 4.72%

Supplier B Supply rate per m³ 222.00 0.91% 230.00 3.60% 235.00 2.17% 246.00 4.68%

Supplier C Supply rate per m³ 220.00 0.00% 229.00 4.09% 236.00 3.06% 248.00 5.08%

Average 220.67 0.30% 228.87 3.70% 234.67 2.50% 246.00 4.80%

Steel Reinforcement (6-8) mm 0 0 0 0 0 0 0 0

Supplier A Supply rate per ton 2,880.47 -0.20% 2,870.00 -0.36% 2,855.00 -0.52% 2,840.00 -0.53%

Supplier B Supply rate per ton 2,885.00 -0.10% 2,880.00 -0.17% 2,860.00 -0.69% 2,850.00 -0.35%

Supplier C Supply rate per ton 2,889.00 0.10% 2,885.00 -0.14% 2,870.00 -0.52% 2,860.00 -0.35%

Average 2,884.82 -0.10% 2,878.33 -0.20% 2,861.67 -0.60% 2,850.00 -0.40%

Cement (OPC) 0 0 0 0 0 0 0 0

Supplier A Supply rate per bag 13.85 0.36% 13.87 0.14% 13.18 -4.97% 13.87 5.24%

Supplier B Supply rate per bag 13.90 0.72% 13.93 0.22% 13.20 -5.24% 13.93 5.53%

Supplier C Supply rate per bag 13.95 1.09% 13.99 0.29% 13.23 -5.43% 13.99 5.74%

Average 13.90 0.70% 13.93 0.20% 13.20 -5.20% 13.93 5.50%

Diesel Fuel 0 0 0 0 0 0 0 0

Online 1.15 0.00% 1.15 0.00% 1.15 0.00% 1.15 0.00%

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KSA UNIT RATES 2024

Item Unit SAR

Concrete Blinding, C 20 m³ 420

Concrete, C40 m³ 520
Concrete, C60 m³ 550
Shuttering m² 142
Reinforcing Bars kg 4.9
Reinforcing Mesh m² 38
Structural Steel kg 23
Metal Deck m² 220
Waterproofing m² 60
Roof Insulation m² 65
Blockwork, Solid, 100 mm Thick m² 130
Blockwork, Solid, 200 mm Thick m² 170
Blockwork, Hollow, 100 mm Thick m² 90
Blockwork, Hollow, 200 mm Thick m² 125
Lightweight Partitions, Gypsum Board/Timber Studs, 100 mm Thick m² 210
Lightweight Partitions, Gypsum Board/Timber Studs, 150 mm Thick m² 250
Lightweight Partitions, Gypsum Board/Timber Studs, 200 mm Thick m² 290
Glazed Partitions m² 1,500
Aluminium/Glazing, Stick System m² 2,400
Aluminium/Glazing, Unitised m² 2,400
Aluminium Louvers m² 1,600
Aluminium Mashrabiya m² 1,500
Plaster Finish m² 50
Paint Finish m² 35
Sand/Cement Screeds m² 95
Gypsum Board Ceilings m² 135
Suspended Ceiling System m² 190
UPVC Drainage Pipe, 110 mm dia Lm 100
UPVC Drainage Pipe, 160 mm dia Lm 160
HDPE Rainwater/Waste Pipe, 80 mm Lm 95
HDPE Rainwater/Waste Pipe, 110 mm Lm 115
PPR Water Pipe, 15 mm dia Lm 85
PPR Water Pipe, 25 mm dia Lm 95
PPR Water Pipe, 75 mm dia Lm 100
Copper Pipe, 54 mm dia Lm 215
Copper Pipe, 67 mm dia Lm 275
Copper Pipe, 108 mm dia Lm 390
Black Steel, Chilled Water Pipe, 20 mm dia Lm 96
Black Steel, Chilled Water Pipe, 50 mm dia Lm 190
Black Steel, Chilled Water Pipe, 65 mm dia Lm 210
Carbon Steel, Chilled Water Pipe, 40 mm dia Lm 180
Carbon Steel, Chilled Water Pipe, 65 mm dia Lm 220
Carbon Steel, Chilled Water Pipe, 80 mm dia Lm 280
Ductwork, Gauge 22 kg 40
Ductwork, Gauge 26 kg 43

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CURRENCY MOVEMENTS 2024

US Dollar (USD) 0.00%

Euro (EUR) 6.05%

Japanese Yen (JPY) 11.90%

British Pound Sterling (GBP) 1.24%

Chinese Renminbi (CNY) 3.02%

Indian Rupee (INR) 2.70%

Currency

Russian Ruble (RUB) 23.50%

Vietnamese Dong (VND) 4.93%

Sri Lankan Rupee (LKR) -9.60%

UAE Dirham (AED) -0.68%

Australian Dollar (AUD) 9.38%

Singapore Dollar (SGD) 2.75%

Korean Won (KRW) 13.84%

South African Rand (ZAR) 2.49%

-10% -5% 0% 5% 10% 15% 20% 25%

Exchange Rate Movement Against SAR (%)

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TENDER PRICE INFLATION

ANALYSIS FOR SAUDI ARABIA (2018-2026)
2018 2019 2020 2021 2022 2023 2024 2025 2026
(Forecast) (Forecast)

Baseline +3.0% +3.9% +5.2% +5.6% +6.6% +7.0% +7.4% +7.6%

Note: The base year (2018) is indexed at 100 for reference.

Annual Percentage Increase in Tender Price Inflation (2018-2026)

8
+7.6%
+7.4%

+7.0%
7
+6.6%

6
+5.6%

+5.2%

5
Percentage Increase (%)

+3.9%
4

+3.0%
3

2018 2019 2020 2021 2022 2023 2024 2025 2026

(Forecast) (Forecast)

Year

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The forecast for Tender Price Inflation (TPI) in 2025 suggests a rise of 7.4%, which is an increase from the 7%
recorded in 2024. Over the four-year period from 2021 to 2024, TPI has compounded to a total increase of 24.4%,
reflecting a significant overall rise in construction costs during this time.

Key Observations:
• Vision 2030 as a Growth Driver: The Kingdom's Vision 2030 megaprojects, such as NEOM, Diriyah Gate, and
Qiddiya, are key contributors to increasing construction costs. These projects drive demand for skilled labour,
materials, and specialist services, directly impacting TPI growth.

• Material Costs and Supply Chain Challenges: Imported materials such as steel, concrete, and specialist
equipment are seeing price volatility. This is compounded by supply chain disruptions and increased global
demand.

• Labor Market Dynamics: Skilled labour shortages and wage inflation remain persistent challenges. The
Kingdom's reliance on expatriate workers adds further complexity to labour cost management.

• The Year Ahead: TPI has demonstrated consistent growth, averaging 6.1% over the past four years. Projections
indicate an anticipated growth rate of 7.4% in 2025. This upward trend is largely influenced by increasing labor
costs and rising living expenses, which are contributing to higher general requirements and preliminary costs
for contractors.

Recommendations for Stakeholders:

• Vision 2030 as a Growth Driver: As Saudi Arabia’s construction sector evolves under Vision 2030, stakeholders
must adopt strategic approaches to manage rising costs, regional inflation risks, and supply chain complexities
effectively.

• Regional Focus: Hyperinflation risks in regions hosting giga-projects, such as Tabuk (NEOM) and Riyadh, require
close monitoring. Regional cost indices should guide procurement strategies.

• Optimising Contracts: Fixed-price contracts or escalation clauses can mitigate the impact of cost volatility.
Collaboration with experienced Quantity Surveyors is critical for contract structuring.

• Supply Chain Efficiency: Early engagement with suppliers and contractors will help secure materials at
competitive rates and reduce delays, particularly for critical components.

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TECHNOLOGY INSIGHTS
Digital • Building Information Modelling (BIM): BIM has become vital for enhancing
Transformation collaboration, reducing rework, and improving overall project management.
By offering a shared digital environment, BIM allows project stakeholders to
visualise, plan, and execute more efficiently.
• AI-Powered Tools: Artificial intelligence is revolutionising the construction
sector with tools that optimise risk management, streamline cost planning,
and allocate resources effectively, ensuring projects stay on time and within
budget.

Modular • The rise of modular construction is reshaping how projects are delivered. By
Construction enabling faster timelines and minimising material wastage, this method is
gaining traction, especially in giga-projects where efficiency and
sustainability are paramount.

Data-Driven • With the integration of advanced analytics and IoT, real-time data is
Decision-Making becoming a game-changer in construction. From tracking material usage to
monitoring project milestones, data-driven insights are empowering
stakeholders to make informed decisions that enhance productivity and
reduce risks.

Robotics and • Robotics and automation are addressing labour shortages while significantly
Automation boosting productivity. From autonomous machinery to robotic bricklayers,
these technologies are improving precision and accelerating project delivery.

Technology • While the benefits are clear, challenges remain. High upfront costs, the need
Adoption for workforce training, and integration complexities can slow adoption.
Challenges
Overcoming these barriers requires a strategic focus on long-term value and
industry-wide collaboration.

Conclusion

Technological advancements are no longer optional—they are essential for achieving Vision 2030 goals. By
embracing innovation, the construction industry in the Middle East is poised to deliver sustainable, efficient, and
value-driven practices that will define the future of construction.

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SUSTAINABILITY INSIGHTS
Sustainable • The adoption of low-carbon materials, such as green concrete, and
Construction renewable energy solutions is reshaping construction in Saudi Arabia.
Mega-projects like The Line and Diriyah Gate are leading the way in
embedding sustainability into their core.

Carbon • Tracking emissions and integrating carbon accounting systems are rapidly
Footprint Tracking becoming industry standards, enabling developers to align with global
sustainability goals.

Circular • Recycling and waste management are key components of Saudi Arabia’s
Economy Initiatives sustainability efforts. Initiatives include reusing construction waste and
applying lifecycle assessment frameworks to minimise environmental impact.

Green • Certifications like LEED and Estidama are increasingly valued, promoting
Certifications environmentally conscious practices and enhancing the appeal of
sustainable developments.

Water and • Strategies such as water recycling systems and energy-efficient building
Energy Efficiency designs are now integral to mega-developments, ensuring resource
optimisation and environmental responsibility.

Conclusion

Sustainability lies at the heart of Saudi Arabia’s construction transformation. By prioritising innovative practices, the
industry is building a greener, more resilient future.

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YOUR 3-STEP GUIDE TO PROJECT SUCCESS

Step 1

COMPREHENSIVE
PLANNING AND DESIGN
• Early-stage cost planning is critical for project success. Feasibility studies, value engineering, and
robust risk assessments help establish a solid foundation. Integrating BIM during the design phase
enhances clarity and reduces costly revisions, ensuring smoother execution.

Step 2

EFFECTIVE COST AND

RESOURCE MANAGEMENT
• Implementing robust cost controls and efficient procurement strategies is essential to manage
budgets effectively. Leveraging technology to optimise workforce allocation and addressing
material availability and labour shortages proactively ensures smooth operations.

Step 3

COLLABORATIVE EXECUTION
AND MONITORING
• AI-driven tools provide real-time monitoring and enable proactive resolution of potential issues.
Collaboration between stakeholders is vital to maintain timelines and budgets, ensuring successful
project delivery.

Conclusion

By following these three steps, strategic planning, efficient resource management, and collaborative execution,
real estate professionals can confidently navigate the complexities of Saudi Arabia’s giga-projects and deliver
lasting success.

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Stonehaven provides world-class cost management, project

management, and advisory services across public and private
sectors. We deliver value and certainty, helping clients create
sustainable built environments. Our expertise spans the entire
lifecycle of physical assets, from concept and construction to
operation and deconstruction. Stonehaven.ae

Disclaimer: This whitepaper is provided for general informational purposes only and does not constitute professional, legal, or financial advice. While
efforts have been made to ensure accuracy, Stonehaven makes no guarantees regarding completeness or suitability. Readers should seek
professional advice for specific situations. Stonehaven accepts no liability for any reliance placed on this content. All rights reserved.