Research Report

Kingdom of
Saudi Arabia
Construction Cost
UPDATE
August 2021

Accelarating Success
 Construction Cost Movement
The Market Outlook
Following the challenging year of 2020, Saudi Arabia’s construction sector has slowly recovered in 2021 with
forecasted growth of 2.9%.
Similar to many other countries, stimulus and support packages have been put in place to somewhat offset the
impact of the pandemic and with the Crown Prince’s announcement that the PIF will invest 150 billion riyals annually
into the local economy for new projects until 2025, coupled with long term diversification plans under Vision 2030,
this will give a welcomed boost to the construction industry.

Materials
We have seen commodity prices rise dramatically from 4th quarter of 2020. The increase has been spurred by the
global economic rebound, supply chain backlog and improved growth prospects. The volatility of commodity prices
has caused some challenges to developers and contractors in assessing future projects and in dealing with long term
contracts which were already awarded. Though, we have witnessed some normalisation in Q2 2021.
The mid to long term affect will be strongly influenced by how the pandemic is controlled globally and locally. We
predict as the pandemic eases and the world economy reverts to some form of normality, there will be a downward
correction of global commodities and in turn regional construction materials.

Below is an example of material price (movement) between Q2 2020 – Q2 2021

Timber Concrete Sand Ready Mix Rebar Cement Electric

30.6% 19.5% 7.3% 12.7% 31.1% 8.2% 37.2%

Over the 12 months between Q2 2020 – Q2 2021 the largest changes include rebar, timber, wires & cables, which
correlates with the upward trend of the commodity trade for aluminium, iron ore, copper and lumber over the same
period.

Challenges Ahead
Colliers is engaged in developing project specific strategies at the design development stage of projects to ensure
material price & tender price inflation, skill shortages and the ability of contractors to deliver mega large-scale
projects, does not have a negative impact on the construction cost and viability of developments.

KSA – Tender Price Index % Change

110.0

105.0

100.0

95.0

90.0

85.0

80.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

KSA Construction Cost Update – August 2021 2

2021 (3rd Qtr)

Item Building Type Cost Range (SAR/m2)

Residential
1 Villa - Commercial Specification 1,999 - 2,477
2 Villa - Medium Specification 2,683 - 3,963
3 Villa - Medium High Specification 3,867 - 4,766
4 Apartment Low to Medium Rise - Commercial Specification 2,446 - 3,094
5 Apartment Low to Medium Rise - Medium Specification 3,082 - 4,035
6 Apartment High Rise - High Specification 4,997 - 6,127
Commercial (Shell and Core Only)
7 Office Low Rise – Commercial to Medium  Specification 2,678 - 3,279
8 Office Medium Rise - Medium Specification 3,453 - 4,194
Industrial
9 Light Duty Industry 1,782 - 2,867
10 Medium Duty Industrial 2,623 - 5,060
Hotels (Including FF&E)
11 Three Star 4,954 - 6,775
12 Four Star 6,685 - 8,486
13 Five Star 8,476 - 10,060
Retail (Shell and core with public area finished)
14 District Mall 3,852 - 5,523
Car Parking
15 Podium 1,880 - 2,435
16 Basement 2,248 - 2,989

•  Professional fees, land acquisition costs and financing costs are excluded from the above.
•  All hotel rates are inclusive of Furniture, Fittings and Equipment (FF&E).
•  Costs/m2 are based on GIA as per the RICS code of measuring practice 6th edition.
•  Cost ranges capture the average, based on all regions throughout Saudi Arabia.

KSA Construction Cost Update – August 2021 3

Bob Flanagan
offices in Managing Director
Building & Cost Consultancy Services
Middle East & North Africa
bob.flanagan@colliers.com

67 Justin Ng
Director
Building & Cost Consultancy Services
Middle East & North Africa

countries on justin.ng@colliers.com

Aidan Connolly
Director

6
Building & Cost Consultancy Services
Middle East & North Africa
aidan.connolly@colliers.com

continents

$3.3B
in revenue

2B
square feet under management

18,000 +
professionals

About Colliers
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67 countries. Colliers delivers a full range of services to real estate users, owners and investors worldwide,
including global corporate solutions, brokerage, property and asset management, hotel investment sales
and consulting, valuation, consulting and appraisal services and insightful research. The latest annual
survey by the Lipsey Company ranked Colliers as the second-most recognised commercial real estate firm
in the world. In MENA, Colliers has provided leading advisory services through its regional offices since
1996.

Disclaimer

The information contained in this report has been obtained from sources deemed reliable. Any information Colliers
on projects, financial or otherwise, are intended only to illustrate particular points of argument and do
not constitute forecast of actual performance. While every reasonable effort has been made to ensure United Arab Emirates
the accuracy of the information, we provide no warranty or guarantee as to the accuracy or completeness
of the information in this report and Colliers assumes no liability whatsoever in relation to the forecast, Colliers.com
figures or conclusions contained herein. Any statements or opinions must not be treated as investment or
valuation advice and must not be relied on for investment or any other purposes. Readers are encouraged
to consult their professional advisors prior to acting on any of the material contained in this report.