The construction activity in the leading Middle East markets is witnessing significant growth fueled by the region’s investment in nation-building agendas, aiming to diversify their economies away from reliance on fossil fuels, according to global professional services consultancy Turner & Townsend.
Among these markets, the Kingdom of Saudi Arabia stands out, both in terms of new project opportunities and the government’s commitment to major infrastructure investments.
The average cost to build in Riyadh is estimated at $2,379 per square meter, which is less than half of New York, but the Saudi capital is one of two markets in a global survey that are ‘overheating’, boosted by strong pipelines and straining under robust activity levels, online news portal Zawya said while quoting Turner & Townsend’s
The construction activity in Doha is experiencing a cooling effect after the unprecedented World Cup programs, as stated by the industry expert in their International Construction Market Survey (ICMS). The Doha market is now cooling, following the completion of the competition, with the rate of cost inflation easing from 8.0% in 2022 to 3.5% in 2023.
The survey also shows that the region has been less affected by supply chain disruption and softening growth seen in other markets.
Turner & Townsend pointed out that the Middle East presents a relative bright spot in a challenging global construction market, with many regions experiencing high costs and inflation, as well as critical labour shortages.
According to ICMS, the most expensive location to build in the region is Doha, with an average cost of $2,588 per sq metres.
Turner & Townsend forecasts that costs will continue to rise by 7.5% during 2023 as the Kingdom of Saudi Arabia sees unprecedented investment in new ‘giga-projects’ as part of the country’s ambitious Vision 2030 programme.
These include NEOM, a new 265,000 sq km city in the northwest of the country, as well as flagship entertainment projects such as Qiddiya near Riyadh and the SEVEN ventures across the Kingdom.
The UAE is seeing stable conditions, with an average cost escalation of 4% over 2022 and 2023 in Abu Dhabi and 5% in Dubai. Hot markets for the UAE include luxury development, including for tourism, as well new infrastructure and improved public realm, stated the report.