Regional analyses
Middle East
Kingdom of Saudi Arabia
Cost escalation: 4%
Economic growth: 4-4.6% ¹³
In 2026, construction activity in Saudi Arabia is expected to keep rising, even as some projects are scaled back. Growth will be supported by ongoing public spending and investment under Vision 2030. Costs are rising due to heavy use of imported and specialist materials, and strong demand for Tier 1 and Tier 2 contractors. Skilled labour is also in short supply, particularly in Riyadh and other fast growing hubs.
Overall construction costs are expected to rise by 4%. More complex projects relying on imported and specialist materials and a limited pool of experienced labour will see the biggest increases. Data centres and digital infrastructure are the fastest growing sectors. These projects may see cost increases of 6-8%. Tourism, entertainment and high-end hospitality are also expanding. Costs are expected to rise here by 5-7%. This reflects the drive to meet international fit out standards and limited availability of experienced trades. Other mid-market residential, community and basic infrastructure projects should see closer to low single-digit cost increases. In 2026, uncertainty will result in delay and rephasing rather than cancellation. Teams will look again at scope, review costs more closely and define projects more clearly to move forward. Strong cost control, realistic phasing, and careful selection of the correct procurement route will be needed.
United Arab Emirates
Cost escalation: 3%
Economic growth: 5% ¹⁴
In 2026, construction activity in the UAE is expected to keep growing, but at a steadier pace than recent years. Costs are expected to increase by 3%. A shortage of skilled workers is pushing wages up. Fewer contractors available to bid are driving higher costs and longer procurement periods. Supply chain disruption, changes in material prices, oil price volatility, geopolitical tensions and rising freight costs may also delay projects and increase prices. Strong demand for data centre equipment and luxury building finishes is adding further pressure.
Growth will be strongest in transport, infrastructure, data centres and major tourism projects. These are driven by large government-backed programmes. As demand is high, these sectors are also likely to face the greatest cost pressure. Meanwhile, education, water and utilities projects should see less pressure. This is due to stable procurement routes and long-term contracts.
Early planning will be key to managing risk in 2026. Securing contractor capacity in advance will be crucial. Multi-year agreements and strategic alliances will help lock in rates and reduce delivery risk.
13 Saudi Ministry of Finance, IMF Economic Outlook, World Bank and Currie & Brown estimate.
14 IMF Economic Outlook
“In the Middle East, momentum will come from clear decisions and agile delivery. With capacity tight, the advantage is in early planning, realistic phasing, and flexible procurement. That way, when opportunities arise, progress will be fast while costs stay under control.”
Craig Finlayson
Senior Director, Middle East
Currie & Brown