Saudi construction cost inflation eased to 2.2% in September

Construction costs cooled again in September, even as forecasters turned cautious. The Construction Cost Index rose 2.2% y-o-y in September, easing from a rise in June of 2.7%, and inching down against August and July’s 2.3%, according to recent data (pdf) from the General Authority for Statistics (Gastat). The residential segment, which carries roughly three-quarters of the basket, was up 2.1%, while non-residential rose 2.6%.

The pressure sits in equipment: Rental of equipment and machinery jumped 4.1% for residential builders and 5.8% for non-residential, and plants hired with an operator rose faster still, up 5.5% and 7.2%. Materials and labor stayed mild by comparison, each up roughly 1.5-2%, with energy adding 3.0% across both segments.

The forward picture is less benign for the sector. JLL has raised its 2026 forecast for Saudi tender price inflation to 5% from 4%, citing persistent cost pressures and squeezed contractor margins, with surging copper and aluminum prices among the drivers. Knight Frank has also warned that higher construction and logistics costs and supply-chain disruptions are pressuring project viability, enough to push some developers to rethink timelines and commercial feasibility.

Awards, meanwhile, swung back toward size. Contractors secured nine projects worth SAR 7.8 bn in September, up from SAR 4.9 bn across 13 projects in August, per Saudi Contractors Authority data (pdf) — a tilt back to larger tickets after last month’s shift to smaller, phased work.