Saudi Arabias construction cost rises 1.9% in 12 months

Riyadh –  The average of construction cost in Saudi Arabia advanced by 1.9% in the 12-month period between the third quarter of 2017 and the same period of this year, Colliers international said in a report.

Future Outlook

The global commercial real estate services firm noted that workload and labour are the key drivers that will set the kingdom’s construction cost over the next 12 months.

Workload

The report said that project pricing is “very aggressive” on the back of competition for work. As for profit margins of contractors, the report did not expect a growth in the near future until the real estate firms fill their order books.

Colliers international noted that the GCC nation’s numerous projects that have been announced over the last 12 months would help to bring optimism to the industry.

“However, it will take significantly more projects to commence, to have a real impact on increasing margins that contractors will include within their bids. A such, reduced competition is predicted to have a minor impact on tender pricing over the next 12 months,” according to the report.

Labour

The procedures implemented by Saudi Arabia to carry out nationalisation in various sectors, as well as taxes imposed on expatriates, have contributed to raising labour’s costs in the nation.

The Canadian company further expected that tender price inflation’s average for construction costs will be 1.8% in the coming 12 months.

Colliers international is a Canadian real estate company with a presence across 69 nations.