construction costs in Saudi Arabia continue their upward trajectory through 2026, driven by rising operating expenses, energy and labor, along with limited price increases for some basic materials.
Data released by the General Authority for Statistics showed that the construction cost index in the Kingdom recorded a rise of 1.4% during January 2026 compared to the same month in 2025. According to the data, the index rose to 102.4 points in January 2026, compared to 101 points in January last year, based on the base year 2023, reflecting a significant increase in the costs of implementing construction projects at the level of the Kingdom.
The Authority explained that this rise is due to the rise in construction costs in both the residential sector by 1.4% and the non-residential sector by 1.5%, indicating that price pressures included all types of projects without exception.
Continuous upward trajectory within a year
Over the course of 2025, the construction cost index continued to move within an upward range, stabilizing at 101 points in January, then seeing gradual increases over the following months, ranging between 101.1 and 101.8 points until the end of December. Entering January 2026, the index jumped to 102.4 points, the highest annual level during the monitored period.
Labor and energy lead the rise
Labor costs led the increase, rising 2.6% y-o-y, reflecting continued pressure in the construction-related labor market. Energy costs also registered a strong increase of 3%, while equipment and machinery rental costs rose by 2%.
Basic materials, despite accounting for the largest share of the index weight, saw a relatively modest increase of only 0.3%, indicating that the current increase is driven more by operating items than raw material prices.
Residential sector. An increase led by wages and equipment Non-residential sector. Relatively higher pace
In the residential sector, the index rose as labor costs rose by 2.5%, along with equipment and machinery rental prices rising by 1.9%. Energy prices saw a similar increase to the rest of the sectors at 3%, while basic materials recorded a slight rise of 0.3%. Due to these factors, total residential construction costs recorded a year-on-year growth of 1.4%.
The non-residential sector recorded a slightly higher pace of increase, driven by a 2.6% increase in labor costs, a 2.3% rise in equipment and machinery rental prices, and a 3% rise in energy costs. Basic materials rose by 0.3%, contributing to a 1.5% year-on-year increase in the sector's overall index.
