JLL has adjusted its 2026 Tender Price Inflation (TPI) forecast for Saudi Arabia’s construction sector to around 5%, up from a previously projected 4%, amid rising construction costs and supply chain disruptions. It expects TPI to hold at circa 5% in 2027.
JLL also forecasts TPI to hold at circa 5.0% in 2027, within the same 4.0% to 6.0% range, as input-cost pressures persist and competitive tension continues in the market, according to JLL’s newly released Saudi Arabia Construction Market Review for H1 2026.
It further indicated that cost escalation was concentrated in metal-intensive, import-dependent trades, with prices for key construction materials and fuels such as copper, aluminum, and diesel increasing by 44.5%, 23.9%, and 7.9%, respectively, in the year to August 2026.
Following ongoing geopolitical tensions, procurement, pricing, and project timelines are being reshaped across the Kingdom, with impact varying based on project location and stage, said the global commercial real estate services and investment management company.
It added that contractors are currently absorbing a significant portion of the escalating price increases through compressed profit margins. This is largely driven by a competitive tendering environment, which is temporarily shielding developers from feeling the full weight of market inflation.
This growth is driven by recent policy changes, including Riyadh’s revised White Land Tax, which is accelerating construction activity and incentivizing the development of previously unutilized land parcels, providing fresh momentum to the market, it added.
JLL also noted that, looking ahead, expanding opportunities in public-private partnerships across healthcare, education, and urban development are attracting a robust mix of local and international players, reflecting long-term sector resilience.
“We are seeing an evolution in Saudi Arabia’s construction sector as it transitions from hyper-growth to a mature, sustainable phase,” said Maroun Deeb, Head of Project Development Services MEA.
As public-private partnerships expand, success now relies on smarter procurement strategies to navigate supply chain challenges and drive the Kingdom’s long-term economic growth, he added.
JLL has adjusted its 2026 Tender Price Inflation (TPI) forecast for Saudi Arabia’s construction sector to around 5%, up from a previously projected 4%, amid rising construction costs and supply chain disruptions. It expects TPI to hold at circa 5% in 2027.
JLL also forecasts TPI to hold at circa 5.0% in 2027, within the same 4.0% to 6.0% range, as input-cost pressures persist and competitive tension continues in the market, according to JLL’s newly released Saudi Arabia Construction Market Review for H1 2026.
It further indicated that cost escalation was concentrated in metal-intensive, import-dependent trades, with prices for key construction materials and fuels such as copper, aluminum, and diesel increasing by 44.5%, 23.9%, and 7.9%, respectively, in the year to August 2026.
Following ongoing geopolitical tensions, procurement, pricing, and project timelines are being reshaped across the Kingdom, with impact varying based on project location and stage, said the global commercial real estate services and investment management company.
It added that contractors are currently absorbing a significant portion of the escalating price increases through compressed profit margins. This is largely driven by a competitive tendering environment, which is temporarily shielding developers from feeling the full weight of market inflation.
This growth is driven by recent policy changes, including Riyadh’s revised White Land Tax, which is accelerating construction activity and incentivizing the development of previously unutilized land parcels, providing fresh momentum to the market, it added.
JLL also noted that, looking ahead, expanding opportunities in public-private partnerships across healthcare, education, and urban development are attracting a robust mix of local and international players, reflecting long-term sector resilience.
“We are seeing an evolution in Saudi Arabia’s construction sector as it transitions from hyper-growth to a mature, sustainable phase,” said Maroun Deeb, Head of Project Development Services MEA.
As public-private partnerships expand, success now relies on smarter procurement strategies to navigate supply chain challenges and drive the Kingdom’s long-term economic growth, he added.
