Leading Middle Eastern markets continue to see significant growth in construction activity,
as the region invests in nation-building agendas.
that support economic diversification away from fossil fuels,
according to global professional services consultancy Turner & Townsend.
Saudi Arabia leads the region in new project opportunities and government commitment to major investments in infrastructure.
The average cost of construction in Riyadh reached $2,379 per square metre,
while the activity of the Doha market is declining after the unprecedented World Cup programmes.
The survey also showed that the region was less affected by supply chain disruptions and slower growth in other markets.
Turner and Townsend noted that the Middle East region represents a relatively bright spot in the challenging global construction market.
Many regions suffer from high costs and inflation, as well as severe labor shortages.
Best Consulting Firm data reveals that 74.2% of global markets show a ‘skill shortage’ in the report.
Through a survey of 89 global cities, the United States dominates the rankings for the most expensive places to build.
With six US cities in the top ten.
New York is the most expensive market, with an average construction cost of $5,451 per square metre.
San Francisco comes in second at $5,200.
According to ICMS, the most expensive construction site in the region is Doha,
with an average cost of $2,588 per square metre.
Huge projects in the Arab countries
Qatar has seen sustained cost inflation due to intense construction activity in recent years,
particularly in preparation for the 2022 FIFA World Cup.
The Doha market is now cooling off, now that the competition is over,
the cost inflation rate has fallen from 8.0% in 2022 to 3.5% in 2023.
For comparison, costs in Riyadh increased by 10 percent in 2022.
Resulting in an average construction cost of $2,379 per square metre.
Turner & Townsend expects costs to continue to rise by 7.5% through 2023.
Saudi Arabia is seeing unprecedented investment in new “mega projects”
as part of the country’s ambitious Vision 2030 programme.
These projects include NEOM, a new 265,000 square kilometer city in the northwest of the country,
In addition to pioneering entertainment projects such as Qiddiya near Riyadh and SEVEN projects across the Kingdom.
The UAE is witnessing stable conditions, with an average cost escalation of 4.0% during 2022 and 2023 in Abu Dhabi and 5.0% in Dubai.
The report stated that hot markets in the UAE include luxury development,
including tourism, as well as new infrastructure and an improvement in the public realm.
COP28, which will be held later this year, is a significant milestone for the country and the wider region.
The Turner & Townsend report identifies the increasing priority
of sustainable building practices to reduce carbon emissions and protect water resources across the region.
While the development prospects for the Middle East are buoyant,
Turner & Townsend cautioned that capabilities and resources will need to be carefully coordinated to avoid risks to project delivery and offset increased competition for labour.
