Saudi construction costs edge up 0.7% in July on diesel, rental rates: GASTAT

22/08/2025 02:31 AST

Rising diesel prices and higher equipment rental rates pushed up building costs in Saudi Arabia by 0.7 percent year on year in July, official data showed.

Figures from the General Authority for Statistics also showed the residential sector, which carries a significant weight in the Construction Cost index, climbed 0.7 percent from a year earlier, while non-residential building costs rose by 0.6 percent.

Equipment and machinery rentals jumped 1.8 percent, driven by a 2.5 percent increase in unoperated equipment rentals.

This comes as Saudi Arabia's Vision 2030 giga-projects amplify demand for labor and materials.

Similar trends are seen across the region, though at different paces, with the UAE's diversified project mix and stronger local supply chains helping to temper cost pressures.

Overall, costs are climbing at varying rates. The UAE is projected to see a 2 to 5 percent rise in 2025, while Saudi Arabia faces sharper inflation, with tender prices expected to surge 7.4 percent, according to a report by cost management firm Stonehaven.

In its latest report, GASTAT stated: "This rise (in the residential sector) had a significant impact on sustaining the annual inflation rate for July 2025 due to the weight of this sector, which is 77.5 percent."

It added: "In the same context, energy prices increased by 9.9 percent, driven by a 27.3 percent rise in diesel fuel prices. Labor costs also rose by 1.5 percent compared to July 2024."

A 0.7 percent drop in basic materials costs, including a 2.1 percent decline in wood and carpentry products and a 1.9 percent fall in metal products, helped offset some of the inflationary pressure.

Non-residential sector
The most significant push in the non-residential sector came from a 1.9 percent rise in equipment and machinery rental costs, again propelled by a 2.3 percent increase in the specific category of unoperated equipment rentals.

Labor costs in non-residential construction increased by 1.2 percent, while energy prices jumped by the same 9.9 percent seen in the residential sector, with diesel fuel's 27.3 percent hike again being the primary cause.

The cost of basic materials for non-residential projects also decreased by 0.7 percent, due to a 1.9 percent decline in metal products and other building materials.

Monthly changes
The report also detailed month-on-month changes, indicating an acceleration in cost pressures as the summer progressed. Compared to June, residential construction costs increased by 0.4 percent in July, primarily due to a 1.1 percent rise in labor costs.

Similarly, the non-residential sector costs saw a higher monthly increase of 0.5 percent. This was driven by a 1.3 percent rise in labor costs and a 0.8 percent increase in equipment and machinery rental fees, suggesting building momentum in cost inflation heading into the second half of the year.

The CCI is an official metric that tracks the monthly price change of essential construction inputs, including materials, labor, equipment, and energy.

The index, which uses 2023 as the base year, tracks 60 construction input items, with data collected monthly across 13 regions from contractors, engineering firms, and suppliers.

Arab News