Saudi Construction Costs Rise 2.3% in July Amid Higher Equipment Rental Prices

Saudi Construction Costs Rise 2.3% in July as Rental Rates Drive Increase

Saudi Arabia’s construction costs increased 2.3 percent year on year in July, with higher equipment and machinery rental charges emerging as the main contributor to the rise, according to official data.

The Construction Cost Index released by the General Authority for Statistics showed residential construction costs rising 2.2 percent annually, while non-residential costs increased 2.6 percent. Despite the increase, the overall pace of growth slowed from 2.7 percent in June. However, it remained significantly higher than the 0.7 percent recorded in July 2025.

The increase comes as Saudi Arabia continues to accelerate housing, infrastructure and large-scale development projects under its Vision 2030 economic diversification programme.

On a monthly basis, the index remained unchanged in July from June, with costs in both residential and non-residential construction holding steady.

Equipment rentals push costs higher

Equipment and machinery rental charges recorded some of the strongest annual increases across both construction segments.

In the residential sector, equipment and machinery rental costs rose 4.2 percent, largely due to a 5.7 percent increase in charges for equipment hired with operators.

Residential labour costs increased 1.4 percent year on year, while energy costs climbed 3 percent. Basic material prices rose 1.8 percent, led by a 3.9 percent increase in timber and joinery costs and a 2.8 percent rise in other building materials.

Non-residential construction recorded a sharper increase in equipment and machinery rental costs, which climbed 5.8 percent. The increase was driven by a 7.3 percent rise in charges for equipment and machinery supplied with operators.

Labour costs in the non-residential segment increased 1.8 percent, while energy prices rose 3 percent. Basic materials also became 1.8 percent more expensive, with other building materials rising 4 percent and timber and joinery prices increasing 2.5 percent.

On a monthly basis, labour costs increased 0.1 percent in both residential and non-residential construction. Residential equipment and machinery rental costs also edged up 0.1 percent from June.

Construction inflation remains above consumer inflation

The latest construction cost increase came despite relatively moderate consumer price growth in the Kingdom. Annual consumer inflation stood at 1.8 percent in July, below the 2.3 percent rise recorded by the construction cost index.

The Construction Cost Index measures price movements across 51 construction inputs. GASTAT collects prices every month across 13 regions through field visits to contractors, engineering offices and construction-material retailers.

The index uses 2023 as its base year and provides a measure of cost pressures facing Saudi Arabia’s construction industry as the Kingdom presses ahead with major Vision 2030 projects.