PHOTO
The Middle East’s ambitious giga-projects and state-backed developments are driving construction activity across the region. This rapid investment, paired with inflation falls and economic diversification, continues to attract global talent while also impacting supply chain capacity.
The International construction market survey (ICMS) 2024 report, from global professional services company Turner & Townsend, shows that rising demand, particularly in the Kingdom of Saudi Arabia (KSA), is pushing up construction costs.
Riyadh is the region’s most expensive city to build in at US$2,593 per m2, as the Saudi capital benefits from accelerated growth. Both domestic and foreign funds are capitalising on state-backed initiatives such as NEOM and the 2030 Vision. At the same time, construction cost inflation in the city is easing from the highs of 7.0 percent seen in 2023, but forecasted to remain high at 5.0 percent through 2024.
Demand is in part being fuelled by the significant increase in construction in sports, leisure and hospitality as the country gears up for EXPO 2030 and the 2034 FIFA World Cup – a five-star luxury hotel in the city now costs an average of US$4,798 per m2. KSA has also been trying to attract global corporate occupiers with the price of an average high-rise CBD office in Riyadh now standing at $2,266 per m2.
Skilled labour shortages are also keeping costs elevated as KSA suffers from a distinct shortage of skilled labour that is vital to deliver its most ambitious programmes. The talent and resources needed for giga-projects in the country are also stretching overall supply chain capacity across the Middle East.
Doha is the second most expensive market in the region at $2,096 per m2. However, following the high output in the lead up to the 2022 World Cup, construction cost inflation is projected to fall from 3.5 percent in 2023 to 2.5 percent in 2024. This reflects softening construction demand in the region, with investment and skilled talent being drawn to nearby Saudi Arabia.
Neighbouring Dubai has an average cost to build of US$1,874 per m2. With a growing population and continued high tourism rates activity in the residential development and hospitality sectors continues at pace, supported by relatively low labour costs. The consistency of investment in the market, as foreign visitors and skilled migrants come to holiday or live in the metropolis, means Turner & Townsend is predicting construction cost escalation at a high rate of 5.0 percent through 2024.
In the face of potential labour bottlenecks across the Middle East, Turner & Townsend is advising clients to prioritise identifying the right procurement strategies and establishing innovative ways of working and digital techniques, in order to battle the capacity crunch and get more for less.
Mark Hamill, director and head of Middle East real estate and major programmes, at Turner & Townsend, commented:
“Over the past year, we’ve seen the Middle East continue to be a hub of major growth and investment as the region aims to move beyond its economic dependence on oil. The stand-out story is the accelerated development of KSA, where vast ambitions are being realised via projects like The Line, King Salman Park and Diriyah Gate.
“Despite the KSA leading the pack in terms of activity in the Middle East, there remain considerable real estate opportunities in the UAE and Qatar as inflation cools. Nevertheless, with labour capacity being stretched across the region, clients will need to review their procurement and contracting models to help mitigate supply chain disruption and maximise the potential opportunities on offer.”
Globally, the ICMS report’s survey of 91 global cities shows the US continuing to dominate the rankings of the most expensive places to build, with six US cities in the top ten. New York has retained its position as the most expensive market to build in for the second year running at an average cost of US$5,723 per m2.
Worldwide deglobalisation trends and nearshoring prompted by supply chain disruption and geopolitical tensions are seeing growth and investment in manufacturing, especially in emerging international markets such as Malaysia, Indonesia, Nigeria, Brazil and Mexico. Labour constraints remain a significant inflationary factor globally, and all but three of the 91 markets surveyed reported an impact from a shortage of skills.
Rankings of Middle Eastern markets:
| Ranking (/91 markets) | Cost per m2 (US$) | 2023 construction cost inflation (%) | 2024 construction cost inflation (%) | Wages / hour (US$) | |
| Riyadh | 56 | 2,593 | 7.0 | 5.0 | 9.9 |
| Doha | 61 | 2,096 | 3.5 | 2.5 | 6.4 |
| Dubai | 66 | 1,874 | 5.0 | 5.0 | 5.9 |
| Abu Dhabi | 67 | 1,844 | 4.0 | 4.0 | 5.7 |
| Regional average | / | 2,102 | 4.9 | 4.1 | 7.0 |
Top 10 global rankings:
| Region | Ranking (/91 markets) | Cost per sqm (US$) | 2023 construction cost inflation (%) | 2024 construction cost inflation (%) | Wages / hour (US$) | |
| New York City | North America | 1 | 5,723 | 6.0 | 3.5 | 145.8 |
| San Francisco | North America | 2 | 5,489 | 6.0 | 2.5 | 138.7 |
| Zurich | Europe | 3 | 5,035 | 2.6 | 2.0 | 124.9 |
| Geneva | Europe | 4 | 5,022 | 2.4 | 2.0 | 125.2 |
| Los Angeles | North America | 5 | 4,866 | 4.5 | 3.0 | 100.0 |
| Boston | North America | 6 | 4,708 | 6.0 | 3.5 | 123.0 |
| Seattle | North America | 7 | 4,636 | 5.0 | 3.0 | 102.8 |
| Chicago | North America | 8 | 4,580 | 5.0 | 4.0 | 98.8 |
| Hong Kong | Asia | 9 | 4,500 | 4.0 | 3.0 | 27.8 |
| London | UK | 10 | 4,473 | 3.5 | 2.0 | 59.5 |
The full report is available on the Turner & Townsend website: https://publications.turnerandtownsend.com/international-construction-market-survey-2024/
-Ends-
For more information please contact:
Thomas Parfitt / Patrick O’Brien
Camargue
E turntown@camargue.uk
About the International construction market survey (ICMS)
Compiling data from Turner & Townsend teams in 91 global markets, the ICMS gives an in-depth analysis of construction costs – and what’s driving them – around the world.
It measures input costs for materials and labour to calculate the average cost per m2 across 11 construction types, including advanced manufacturing sectors, residential development and commercial offices.
All local construction costs have been converted into US dollars to allow accurate cost comparisons to be made between construction markets in widely diverse economies.
About Turner & Townsend
Turner & Townsend is a global professional services company with over 10,000 people in 48 countries. Collaborating with our clients across real estate, infrastructure and natural resources sectors, we specialise in major programmes, programme management, cost and commercial management, net zero and digital solutions.
We are majority-owned by CBRE Group, Inc., the world’s largest commercial real estate services and investment firm, with our partners holding a significant minority interest. Turner & Townsend and CBRE work together to provide clients with the premier programme, project and cost management offering in markets around the world.
We are passionate about making the difference, transforming performance for a green, inclusive and productive world.
www.turnerandtownsend.com
