The report revealed the price of rebar in KSA has increased by 16.5 per cent over the period. There was a 6 per cent rise in the price of timber, 8 per cent aluminium and 1 per cent marble tile.
There was, however, a drop in the price of block work (-4.5 per cent); sand (-4 per cent); concrete (-5 per cent); and cement (-2.5 per cent).
The report continued: “Apart from materials, the two key drivers that will determine construction cost inflation over the next 12 months are workload and labour.
Project pricing is still very aggressive, mainly due to competition for work.
The report read: “Contractors will not increase their profit margins until their books begin to fill. As numerous projects have been announced over the last 2 months and with progress on Saudi’s ‘giga projects’ gathering pace, this will help yo bring optimism to the industry.”
However, it was conceded that significantly more projects wold have to commence, to have a real impact on increasing margins that contractors will include within their bids. “As such, reduced competition is predicted to have a minor impact on tender pricing over the next 12 months.”
Meanwhile, various taxes on expat visas and the continued push towards Saudization has increased the cost of labour.
“However, it is not until we see a significant drive towards recruitment in a more buoyant market, that the extraordinary effects of these regulations will be felt. On average, going forward, every 10 per cent increase in the cost of labour will swing the cost of construction by circa 3 per cent.
On average the cost of construction in Saudi Arabia has increased by 1.9 per cent in the 12 months between Q3 2017 and Q3 2018, according to the latest report from COLLIERS INTERNATIONAL.
The report revealed the price of rebar in KSA has increased by 16.5 per cent over the period. There was a 6 per cent rise in the price of timber, 8 per cent aluminium and 1 per cent marble tile.
There was, however, a drop in the price of block work (-4.5 per cent); sand (-4 per cent); concrete (-5 per cent); and cement (-2.5 per cent).
The report continued: “Apart from materials, the two key drivers that will determine construction cost inflation over the next 12 months are workload and labour.
Project pricing is still very aggressive, mainly due to competition for work.
The report read: “Contractors will not increase their profit margins until their books begin to fill. As numerous projects have been announced over the last 2 months and with progress on Saudi’s ‘giga projects’ gathering pace, this will help yo bring optimism to the industry.”
However, it was conceded that significantly more projects wold have to commence, to have a real impact on increasing margins that contractors will include within their bids. “As such, reduced competition is predicted to have a minor impact on tender pricing over the next 12 months.”
Meanwhile, various taxes on expat visas and the continued push towards Saudization has increased the cost of labour.
“However, it is not until we see a significant drive towards recruitment in a more buoyant market, that the extraordinary effects of these regulations will be felt. On average, going forward, every 10 per cent increase in the cost of labour will swing the cost of construction by circa 3 per cent.”
SOURCE : ALBILAD
