construction costs in Saudi Arabia continued their upward trend during June 2026, recording the fastest annual growth rate since the General Authority for Statistics began publishing the current time series for the index in January 2024, amid continued increases in equipment, labor, and energy costs.
Data from the General Authority for Statistics that the construction cost index rose to 104.0 points in June 2026 «based on the 2023 base year,» compared to 101.2 points in the same month of 2025, marking an annual growth rate of 2.7%, up from 2.6% last May, and continuing the accelerating pace of increase since the beginning of the year. The data shows that the pace of increase in construction costs followed an upward trend throughout 2026, as the index rose from 1.4% in January and February to 2.0% in March, then 2.4% in April, 2.6% in May, and finally 2.7% in June—the highest level recorded since the index began publication.
Reasons for the Rise in Construction Costs
The Authority attributed this increase primarily to a 5% rise in equipment and machinery rental costs—the highest percentage increase among the index’s components— followed by energy costs, which rose by 3%, then labor costs, which rose by 2.6%, while basic materials—which account for approximately 48.5% of the index’s relative weight—recorded an increase of 1.8%.
The basic materials category is considered the most influential factor in the index’s movement due to its significant weight, while the increases recorded in labor, equipment, and energy contributed to pushing project implementation costs to higher levels compared to the same period last year.
At the sector level, construction costs continued to rise in both the residential and nonresidential sectors, although the nonresidential sector grew at a faster pace.
Residential Construction Costs
In the residential sector, which accounts for approximately 77.5% of the total index, construction costs rose by 2.6% year-over-year. This increase was driven by a 4.5% rise in equipment and machinery rental costs, a 3% increase in energy costs, a 2.5% rise in labor costs, and a 1.8% increase in the prices of basic materials.
The non-residential sector, which accounts for 22.5% of the index, recorded a year-over-year increase of 3.1%, which is higher than that of the residential sector, driven by a 6.7% increase in equipment and machinery rental costs, along with a 3% rise in both labor and energy costs, and a 1.9% increase in basic materials.
The General Authority for Statistics defines the Construction Cost Index as an index that measures the change in the costs of carrying out construction work between two time periods, based on a basket of construction materials and services, It is used as one of the key indicators relied upon by planners, researchers, and entities operating in the development and construction sectors to track trends in construction costs in the Kingdom.
العربية 
English 
