GCC construction markets are bracing for a new wave of rising costs this year, driven by increasing supply and skilled labor challenges. According to a recent report by consulting firm Currie & Brown, the increase in costs for construction is expected to range between 2% and 5% in the UAE, while it could reach 7% in Saudi Arabia.

According to a recent report by Currie & Brown.

Reasons for the rise: Strong demand and supply challenges

<The report cites strong demand for construction projects as the main reason behind the increase, putting pressure on the availability of skilled labor and limited supplies of basic materials. The report, titled "Building a Resilient Future: Adapting to Uncertainty in 2025," emphasized the importance of developing proactive strategies to ensure project continuity in the face of these challenges.

Saudi Arabia. Construction boom and ambitious projects

<Saudi Arabia is experiencing a construction boom, driven by economic growth projections of 4.4% in 2025, up from 1.4% last year. Investments are concentrated in infrastructure, residential, and hospitality, as the Kingdom prepares to host the 2034 World Cup and Expo 2030.

<Megaprojects, such as NEOM and The Line, are the cornerstone of this boom, with implementation accelerating to meet the ambitious timeline of Vision 2030. The construction of stadiums, hotels, and the development of transportation networks and infrastructure will be among the most prominent projects supporting growth in the sector.

UAE Economic momentum boosts construction sector

<In the UAE, forecasts point to strong economic growth of 6.2% by 2025, supported by massive government initiatives such as the Sheikh Zayed Housing Program and **Energy Strategy 2050**. These large-scale projects will drive demand for specialized materials and skilled labor, which could lead to a further increase in costs.

Amid global geopolitical tensions, companies are challenged by the potential for supply chain disruption, requiring alternative plans to diversify material sources and mitigate the risk of project disruption.

With global geopolitical tensions, companies are facing challenges associated with the potential for supply chain disruption.

Global factors behind rising costs

The Currie & Brown report pointed to a range of global factors contributing to rising construction costs, most notably:

Global factors contributing to rising construction costs include:

Global factors contributing to rising construction costs include

Economic uncertainty: Although inflation and interest rates have stabilized, geopolitical conflicts and political volatility are putting additional pressure on labor costs and supply chains.

Digital Revolution: Growing reliance on technology and artificial intelligence has increased the demand for rare and specialized materials, driving up costs.
Skilled labor shortage: This challenge is one of the most prominent obstacles facing construction projects globally, especially in high-growth sectors such as renewable energy and digital infrastructure.

How are companies meeting the challenges?

To address these challenges, the report recommends that construction companies adopt flexible and proactive strategies to ensure that projects continue without disruption, including:

<Diversify supply chains: Relying on multi-sourced networks minimizes the risk of supply disruptions.

Addressing skills shortages: Investing in people development and ongoing training helps bridge the growing gap in skilled labor.
Digital transformation: Using smart data and advanced analytics helps companies more accurately estimate costs and make quick and effective decisions.
Alan Manuel, CEO of Currie & Brown, said: «Inflation in construction costs has become an unavoidable reality. The biggest challenge is flexibility and careful planning to ensure success in 2025 and beyond.»

Future Outlook: Innovation and strategic planning are the key

As the GCC construction industry prepares for a new phase of development, innovation, rapid adaptation, and strategic planning will be the critical factors to overcome current challenges and seize future opportunities.

As the GCC construction industry prepares for a new phase of development, innovation, rapid adaptation, and strategic planning will be the critical factors to overcome current challenges and seize future opportunities. <Flexibility and the ability to restructure business strategies will be the most important tools to ensure the sector's growth and stability in the years to come.