Saudi construction keeps expanding even as awards slip and costs hit a 2026-high

Saudi Arabia held its place as the Gulf’s largest projects market in 3Q. Construction grew even as new contract awards fell and building costs hit an annual high. Two reports paint the picture: Kamco Invest’s GCC Projects Market Update (pdf), citing Meed Projects data, tracks the money being committed, while the Al Rajhi Capital Saudi Construction Index (pdf) shows the work actually underway. Together they show a sector still busy and still securing the region’s biggest share of work, though paying more for it and drawing on fewer segments.

The money kept flowing, just less of it. Saudi awards reached USD 24.4 bn in 3Q, the highest value in the GCC, and USD 73.4 bn over nine months, down from USD 79.5 bn a year earlier, per Kamco.

The mix is where the war is felt: Construction contracts led, up 7.6% y-o-y to USD 9.2 bn, the Kingdom’s biggest segment, and gas jumped 80.1% to USD 6.9 bn. Oil went the other way, collapsing to USD 460 mn from USD 3.8 bn a year earlier as disruptions around the straits hit energy exports, and power awards fell 83.4% to USD 1.6 bn.

Aramco is still the anchor: The oil giant has earmarked USD 50–55 bn for investment in 2026, roughly 65-70% of it for oil and gas, and had already spent USD 12.3 bn on upstream contracts by the quarter, with the largest share going to development of the Dorra gas field.

But 3Q went to the hospitals: Contracts awarded in the quarter included USD 208 mn for mechanical, electrical, and plumbing works at Almoosa Hospital in Al-Khobar, and a USD 105.6 mn contract to finish Taiba University Hospital in Madinah, covering remaining civil works, building systems, clinical fit-outs, and medical-gas infrastructure.

On the ground, the work is still growing. Al Rajhi Capital Saudi Construction Index reached 55.4 in August from 55.2 in July, a fifth straight month above the 50 contraction line, though the slowest pace in four. All three segments expanded: residential led at 56.6, infrastructure quickened to 55.8 from 53.9, and non-residential came in at 50.9. New orders rose for a fifth month, if at the softest rate since May, with infrastructure pulling demand from large housing, transport and industrial work.

… while costs rose at the fastest pace yet. Around 45% of firms reported higher input prices in September and fewer than 1% saw a decline, taking input-cost inflation to its fastest since the survey began in January.

Even so, companies remained optimistic, with 34% expecting activity to rise over the next three months, against 8% bracing for a fall.

Zoom out

The Saudi market stood out against a regional slump. GCC awards fell 37.2% y-o-y and 19.2% q-o-q to USD 47.4 bn, which Kamco put down to the war’s hit to energy exports, trade routes and infrastructure; nine-month awards still rose 2.5% to USD 204.1 bn on a stronger start to the year.

The Kingdom holds the biggest slice of what’s coming: 49.7% of the GCC’s USD 2.05 tn pipeline of planned and unawarded projects is going to the Kingdom, coming to about USD 1.02 tn. Construction makes up 38.3% of that regional pipeline, transport 16.8% and power 15.9%.

One pipeline to watch is data centers. Meed tracks more than 174 active and planned data-center projects across the GCC worth over USD 93 bn, including a USD 5 bn build at Oxagon in Neom and an Amazon Web Services facility in the Saudi Arabia Zone.