Saudi Arabia’s construction cost index experienced a one percent year-over-year increase in November 2025, according to recently released data from the General Authority for Statistics (GASTAT). Both residential and non-residential building sectors contributed equally to this rise. The report, published Monday, provides key insights into the financial pressures facing the Kingdom’s rapidly evolving building and infrastructure landscape.
The increase, when compared to November 2024, signals a continued – though moderate – upward trend in the costs associated with building in Saudi Arabia. GASTAT’s monthly survey showed price stability between October and November 2025, indicating no further immediate cost increases during that period. The data is crucial for stakeholders involved in future projects and planning within the real estate and infrastructure domains.
Understanding the Drivers of Increased Construction Costs
Several factors contributed to the annual increase in construction cost index, as detailed in the GASTAT report. Labor costs saw a 1.5 percent rise, reflecting potentially increased demand for skilled workers amidst ongoing mega-projects. Simultaneously, the rental prices for construction equipment and machinery climbed by 1.3 percent, adding to the overall financial burden.
Impact of Material and Energy Costs
Fluctuations in the prices of raw materials also played a role, although a smaller one. Basic material costs increased by 0.2 percent overall, primarily due to a 1.4 percent increase in cement and concrete prices and a 1.1 percent rise in general raw material expenses. However, the most significant impact stemmed from energy prices, which surged by 9.9 percent, likely influenced by global market conditions.
Non-Residential Construction Costs Mirror Overall Trend
The non-residential construction sector mirrored the general upward trend, experiencing a one percent increase in costs compared to November 2024. Equipment and machinery rental costs were a key driver within this sector, increasing by 1.2 percent overall. An even more pronounced increase of 1.6 percent impacted rental rates for equipment operated by a skilled technician.
Similarly, labor costs within non-residential construction rose by 1.1 percent year-over-year. Energy price increases also affected this sector, climbing 9.9 percent. The cost of specific materials, notably timber and carpentry, saw a 2.5 percent increase, contributing to the overall rise in non-residential building expenses. This suggests potential supply chain issues or increased demand for these specific resources.
GASTAT’s Role in Supporting Saudi Arabia’s Vision 2030
The release of the construction cost index is part of a broader initiative by GASTAT to provide comprehensive statistical data for key sectors of the Saudi economy. This data is intended to serve as a reliable benchmark for decision-making by contractors, real estate developers, and government entities. Accurate cost estimations are vital for effective project planning and execution.
According to GASTAT, these efforts directly support the goals of Saudi Vision 2030, which includes ambitious plans for infrastructure development and diversification of the economy. The availability of detailed cost information allows for more informed investment decisions and helps to ensure the financial viability of large-scale projects. The Kingdom is currently undertaking numerous giga-projects, including NEOM and the Red Sea Project, which are driving significant demand for construction services and materials.
The increasing construction costs are being closely monitored by the Ministry of Housing and Urban Planning, as they could potentially impact the affordability of housing and the pace of development. The government is actively exploring strategies to mitigate these cost pressures, including promoting local manufacturing of building materials and streamlining construction regulations. Furthermore, the rise in energy prices highlights the importance of sustainable building practices and energy efficiency in reducing long-term operating costs.
The data also has implications for the broader property market in Saudi Arabia. Higher construction costs could translate into increased property prices, potentially affecting demand and investment. However, the strong economic growth and ongoing reforms are expected to continue driving demand for both residential and commercial properties.
Looking ahead, GASTAT is expected to release the December 2025 construction cost index data in early February 2026. Analysts will be watching closely to see if the upward trend continues or if prices stabilize. The impact of global economic conditions, particularly energy prices and supply chain disruptions, will remain a key factor influencing construction costs in Saudi Arabia. Further reports will likely provide more granular data on specific material costs and regional variations within the Kingdom.
