In addition, wood prices rose 15 percent year-on-year to SR3,067.49 and cement was up 5 percent to SR14.03 per 50kg bag in Q1.
While steel made the biggest surge, the growth slowed as the year progressed, going from 40 percent growth in January to 28 percent growth in March.
The increase in prices for materials comes as construction activity increased in Q1, according to a new report by real estate consultancy firm JLL.
“From a supply perspective, the first quarter recorded an increase in construction activity,” the JLL report said. According to its figures, in the residential sector in Riyadh 7,700 units were handed over in Q1, bringing the total to 1.3 million units in the capital. In Jeddah, around 2,000 units were added, bringing the total to 838,000 units.
The report estimated that 36,000 units in Riyadh and 12,000 units in Jeddah are due to be delivered this year.
In addition to the increased activity in the residential sector, Riyadh is also set to see an additional 386,000 square meters of office space, 240 square meters of retail space and 2,800 new hotels rooms built this year.
In Jeddah, the city is forecast to gain an additional 43,000 square meters of office space, 200,000 square meters of retail space and 2,700 new hotel rooms.
However, JLL said that while it remained “cautious about the timely delivery of future projects” it believed that going forward “the government initiatives that are pushing Riyadh to be the business hub of the region are expected to spur local and international demand.” Announced in January this year by Crown Prince Mohammed bin Salman, the ambitious Riyadh Strategy 2030 aims to create 35,000 new jobs for Saudi nationals, pump up to SR70 billion into the national economy and double the size of the capital city’s population to as many as 20 million by 2030.
The increased development in the first quarter is a welcome change from 2020, when construction activity declined in the wake of restrictions due to the pandemic.
According to the Contract Awards Index produced by the US-Saudi Business Council (USSBC), the total value of construction contracts awarded in Saudi Arabia during the third quarter of 2020 declined by 84 percent year-on-year.
However, Albara’a Alwazir, an economist at the USSBC, told Arab News that he was confident the sector would rebound, just as it had done after the downturn between 2016 and 2018. “While numerous projects have been delayed because of the pandemic, the government has stated that there will be a continued focus on megaprojects especially those that relate to Vision 2030,” he added.
This was already evident in the USSBC’s Q4 report, which found that the total value of contracts rose 115 percent quarter-on-quarter in the last three months of 2020.
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