Saudi Construction Costs Rise 2.4% as Vision 2030 Projects Fuel Demand

Saudi Arabia’s construction costs continued to climb in April as demand linked to major infrastructure and tourism projects pushed up equipment rental and labor expenses across the Kingdom.

Data released by General Authority for Statistics showed the Construction Cost Index increased 2.4 percent year on year in April, with both residential and non-residential sectors recording higher costs.

Residential construction costs rose 2.4 percent compared with the same month last year, while non-residential construction costs advanced 2.7 percent.

The increase comes as Saudi Arabia accelerates development under its Vision 2030 program, which includes large-scale projects such as NEOM, Qiddiya and The Red Sea Project. The projects have increased demand for contractors, machinery, labor and building materials.

According to GASTAT, the residential sector recorded a 4.7 percent increase in equipment and machinery rental costs, driven by a 6.3 percent rise in the rental of machinery with operators.

Energy prices in the residential segment rose 3 percent annually, while labor costs increased by 2.8 percent.

Basic material prices recorded a smaller increase of 1.2 percent. Timber and joinery products posted a 3.3 percent rise, while plastic and glass products climbed 2.1 percent.

The non-residential sector experienced even stronger increases in equipment rental costs. Machinery and equipment rental surged 6.7 percent year on year, supported by an 8.5 percent increase in rentals involving operators.

Labor and energy expenses in the sector both increased by 3 percent, while prices for basic materials rose 1 percent.

The latest rise in construction costs comes as Saudi Arabia’s property market shows signs of easing, particularly in the housing sector. The Kingdom’s real estate price index declined 1.6 percent year on year during the first quarter, mainly due to a 3.6 percent fall in residential property prices.

On a monthly basis, the Construction Cost Index increased 0.5 percent in April compared with March, with residential and non-residential sectors each posting a 0.5 percent gain.

The index monitors price changes across 51 construction input items and gathers data from 13 regions through field surveys involving contractors, engineering companies and construction material suppliers.

Saudi Arabia’s construction expansion reflects a wider trend across Gulf economies as countries continue efforts to reduce dependence on oil revenues through infrastructure and tourism investment.

Property consultancy Knight Frank forecast in 2025 that Saudi Arabia’s construction output would reach $191 billion by 2029, representing a 29 percent increase from 2024 levels.

Meanwhile, IMARC Group projected in an April report that the Kingdom’s construction market would grow to $140.4 billion by 2034, supported by steady long-term expansion in the sector.