JLL to Al Arabiya: We expect construction cost inflation in Saudi Arabia to stabilize at 5% during 2026

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Maroun Deeb, head of project and development services for the Middle East and Africa region at JLL, expects construction cost inflation in Saudi Arabia to stabilize at about 5%, without an additional increase, despite the pressures resulting from geopolitical tensions, global trade disturbances, and high shipping and insurance costs, noting that the delayed arrival of materials also affects project implementation timetables.

Deeb said, in an interview with Al Arabiya Business, that the Saudi market is heading during the years 2026 and 2027 to a more mature and sustainable stage, after a period of accelerated growth and exceptional activity, with the focus shifting from the size of projects and the speed of their implementation to their economic feasibility, spending efficiency, risk management, and achieving long-term value.

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He added that the basic drivers of activity are still in place, including amendments to the white land fees system, continued competition for projects between contractors, and partnerships between the public and private sectors, pointing out that the moderation of the market pace at the current stage is a natural development after strong growth.

He explained that geopolitical tensions and global trade disturbances raised shipping and insurance costs, which was reflected in the prices of building materials, including copper, aluminum and diesel, as well as imported mechanical equipment and systems, especially related to building facades. The repercussions are not limited to higher prices, but also extend to delayed arrival of materials to work sites, affecting project schedules and adding pressure on costs.

Deeb pointed out that encouraging local manufacturing in the Kingdom helped existing factories absorb some of these pressures and reduce their impact on supply times. He also pointed out that there is competition among contractors in the Saudi market, with a tendency to share risks and returns among them in proportion to the nature of the projects.

Despite the pressure on costs, Deeb confirmed the continued demand in the market, supported by projects related to hosting Expo 2030 and the 2034 World Cup, in addition to opportunities in the retail and hotel sectors.

He pointed out that the retail sector attracts the interest of foreign investors looking for new opportunities, in parallel with the continuation of opportunities in the residential sector, especially after regulatory changes related to real estate ownership.

JLL said that the construction sector in the Kingdom of Saudi Arabia is entering a phase of growth expected during the years 2026 and 2027.

The company added, in its new report on the construction market in the Kingdom during the first half of 2026, that after years of record activity, the moderate and stable growth expected during the next phase reflects the maturity of the market and the shift towards achieving sustainable growth in the long term.

This growth comes as a result of recent policy changes, including amending the “white land fees” system in Riyadh, which contributes to accelerating the pace of construction work and stimulating the development of plots of land that were previously unexploited, adding new momentum to the market.