Saudi Arabia Construction Costs Rise 2.3% in July as Equipment Rental Prices Increase

Saudi Arabia’s construction costs increased 2.3 percent year on year in July, with higher equipment and machinery rental charges pushing up expenses across residential and non-residential projects, according to official data.

The Construction Cost Index, published by the General Authority for Statistics, showed residential construction costs rising 2.2 percent from a year earlier, while costs for non-residential projects increased 2.6 percent.

The overall annual increase was slower than the 2.7 percent recorded in June, but remained significantly above the 0.7 percent rise reported in July 2025.

The latest figures come as Saudi Arabia continues to expand housing, infrastructure and development projects under its Vision 2030 economic programme. The construction sector is playing a central role in the Kingdom’s efforts to diversify its economy and support large-scale urban and infrastructure developments.

On a monthly basis, the Construction Cost Index remained unchanged in July, with costs in both residential and non-residential construction showing little overall movement from June.

Equipment rental costs lead rise

Equipment and machinery rental charges recorded some of the strongest increases during the month.

In the residential sector, equipment and machinery rental costs rose 4.2 percent year on year. The increase was mainly linked to a 5.7 percent rise in the cost of equipment hired with operators.

Residential labour costs increased 1.4 percent, while energy prices climbed 3 percent. Basic material costs rose 1.8 percent, driven partly by a 3.9 percent increase in timber and joinery prices and a 2.8 percent rise in other construction materials.

The pressure was greater in the non-residential sector. Equipment and machinery rental costs increased 5.8 percent, while equipment hired with operators became 7.3 percent more expensive.

Non-residential labour costs rose 1.8 percent and energy prices increased 3 percent. Basic material costs were also up 1.8 percent, with other building materials rising 4 percent and timber and joinery prices increasing 2.5 percent.

Month on month, labour costs increased 0.1 percent in both residential and non-residential construction. Residential equipment and machinery rental costs also edged up 0.1 percent.

Construction costs remain above inflation

The increase in construction costs came despite relatively moderate consumer inflation in Saudi Arabia. Separate data from GASTAT showed annual consumer inflation at 1.8 percent in July.

The Construction Cost Index measures prices for 51 construction inputs. Data is collected each month across 13 regions through surveys of contractors, engineering offices and construction material retailers.

The index uses 2023 as its base year and provides an indicator of changing costs faced by the Kingdom’s construction industry as major development projects continue.