RIYADH: Saudi Arabia’s Construction Cost Index recorded a 2 percent year-on-year increase in March, driven largely by higher equipment rental and labor expenses, with both residential and non-residential segments posting gains.
According to a report released by the General Authority for Statistics, the rise was mainly attributed to a 1.9 percent increase in construction costs for the residential sector and a 2.2 percent hike for the non-residential sector compared to March last year.
The rise in construction costs comes even as Saudi Arabia’s real estate market shows signs of cooling, particularly in the residential segment. The Kingdom’s real estate price index fell 1.6 percent year on year in the first quarter, dragged down by a 3.6 percent decline in residential prices.
In its latest report, GASTAT said: “CCI for the residential sector increased by 1.9 percent as a result of a 4.5 percent rise in the cost of renting equipment and machinery, driven by a 6.1 percent increase in the rental of equipment and machinery with operators, as well as an increase in labor costs by 2.7 percent compared to March 2025.”
Energy prices rose 3 percent, while basic materials prices edged up 0.3 percent, driven by a 0.4 percent increase in cement and concrete and a 1.3 percent rise in timber and joinery.
The non-residential sector saw a sharper 2.2 percent annual increase. Equipment and machinery rental costs jumped 5.9 percent, driven by a 7.8 percent increase in rentals with operators.
Labor costs rose 2.9 percent, and energy costs increased by 3 percent. Basic materials costs were up 0.3 percent, mainly due to a 1.8 percent rise in plastic and glass products and a 1.2 percent increase in timber and joinery prices.
On a monthly basis, the general CCI for March increased by 0.6 percent compared to February. This monthly change reflected a 0.6 percent rise in residential sector costs and a 0.7 percent increase in non-residential sector costs.
The steady momentum in Saudi Arabia’s construction sector aligns with broader trends across the Gulf Cooperation Council, where countries are accelerating efforts to diversify their economies away from hydrocarbons.
Last year, property consultant Knight Frank projected that the Kingdom’s construction output value will reach $191 billion in 2029, marking a 29 percent increase compared to 2024.
