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Tue 8 Oct 2019 03:17 PM

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Construction costs remain stable as Saudi property sector grows

State-backed giga-projects, such as the billion-dollar Neom City, Qiddiya Entertainment City and the expansive Red Sea Project, are set to drive construction demand

Construction costs remain stable as Saudi property sector grows
The kingdom’s swathe of planned social housing schemes is also set to boost real estate activity in the coming years.

The Saudi Arabian construction industry is set grow exponentially from 2020 onwards, spurred by increased government spending and a growing population.

State-backed giga-projects, such as the billion-dollar Neom City, Qiddiya Entertainment City and the expansive Red Sea Project, are set to drive construction demand, said an industry report from property and construction firm Colliers International.

The kingdom’s swathe of planned social housing schemes is also set to boost real estate activity in the coming years, it said.

The government has previously said it wants 60 percent of Saudis to own homes by 2020. It is working with local banks to facilitate financing and help developers increase the supply of affordable units.

Construction costs stable

For the period of Q3 2018 to Q3 2019, prices for key construction materials remained stable overall, with slight individual movements, said Colliers.

The price of cement and concrete rose by four and three percent respectively.

Aluminium costs dropped by three percent and timber dropper marginally by 0.7 per cent.

Labour costs up

Overall construction labour costs are rising as the government rolls out its Saudisation programme (Nitaqat), the report said.

The national workforce initiative, coupled with a shortage of skilled and semi-skilled construction workers, is bumping up workforce costs, it said.

Saudi Arabia’s housing minister said in March he expects investments in the real estate financing sector to reach between 60 billion Saudi riyals and 80 billion riyals ($21.33 billion) this year.

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