01 August 2023

Leading Middle East markets continue to experience high-growth in construction activity, as the region invests in nation-building agendas that support economic diversification away from fossil fuels, according to global professional services consultancy Turner & Townsend.

Saudi Arabia leads the region in new project opportunities and government commitment to major infrastructure investment, with average cost to build in Riyadh seen at $2,379 per sq m, while the Doha market activity is cooling after its World Cup programmes, stated the industry expert in its International Construction Market Survey (ICMS).

The survey also shows that the region has been less affected by supply chain disruption and softening growth seen in other markets.

According to ICMS, the most expensive location to build in the region is Doha, with an average cost of $2,588 per sq m. Qatar has seen sustained cost inflation due to extensive construction activity in recent years, in particular to prepare for the Fifa World Cup in 2022.

The Doha market is now cooling, following the completion of the World Cup, with the rate of cost inflation easing from 8.0 per cent in 2022 to 3.5 per cent in 2023.

By comparison, costs in Riyadh rose by 10 per cent during 2022, establishing an average cost to build of $2,379 per sq m, it added. 

Turner & Townsend forecasts that costs will continue to rise by 7.5 per cent during 2023 as Saudi Arabia sees unprecedented investment in new ‘giga-projects’ as part of the country’s ambitious Vision 2030 programme.

The UAE is seeing stable conditions, with an average cost escalation of 4.0 per cent over 2022 and 2023 in Abu Dhabi and 5.0 per cent in Dubai.  Hot markets for the UAE include luxury development for tourism, as well as new infrastructure and improved public realm, stated the report.

While the development outlook for the Middle East is buoyant, Turner & Townsend has warned that capacity and resource will need to be carefully coordinated to avoid risks to project delivery and offset growing competition for labour.  

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