RIYADH: Saudi Arabia’s construction costs saw an annual rise of 2.3 percent in August, led by higher equipment rental and labor costs, the latest index showed. 

Construction prices in the residential sector increased 2.1 percent year on year, while costs in the non-residential sector climbed 2.6 percent, the General Authority for Statistics said in its latest Construction Cost Index report. 

The increase comes as Saudi Arabia continues to roll out large-scale housing, infrastructure and development projects under its Vision 2030 economic diversification program. 

Market research company IMARC Group forecasts that the Kingdom’s construction sector will reach $140.4 billion by 2034, representing a compound annual growth rate of 3.6 percent during 2026-2034. 

The latest official data comes amid heightened regional tensions, with the Iran war disrupting energy and shipping routes, pushing up fuel and freight costs and raising pressure on construction inputs. 

In its latest report, GASTAT stated: “CCI for the residential sector increased by 2.1 percent year on year. This increase was mainly attributed to the increase in the costs of basic materials by 1.8 percent, driven by an increase in the prices of metal products by 2 percent.”  

It added: “The costs of renting equipment and machinery also increased by 4.1 percent, driven by the increase in the costs of renting equipment and machinery with an operator by 5.6 percent. 

In the residential sector, labor costs increased by 5.1 percent in August compared to the same month of the previous year, while energy expenses advanced by 3 percent during the same period. 

Non-residential sector 

CCI in the non-residential sector increased 2.6 percent year on year in August, according to GASTAT. The increase was attributed primarily to a 5.8 percent rise in equipment and machinery rental costs, driven by a 7.2 percent increase in rental costs for equipment and machinery with an operator.  

Labor costs rose 2 percent, while energy costs increased 3 percent. Basic materials costs also rose 1.8 percent, reflecting increases of 4.3 percent in other construction materials and 2.1 percent in timber and joinery. 

Monthly analysis 

On a monthly basis, Saudi Arabia’s overall CCI increased 0.1 percent in August from July. 

Both the residential and non-residential sectors recorded 0.1 percent increases during the month, GASTAT said. 

The CCI tracks price movements in construction inputs across 51 items, with prices collected monthly from 13 regions through field visits to contractors’ offices, engineering offices and establishments selling construction materials.