Construction Costs In Middle East Projected To Rise By Up To 7% In 2024: Report

The Middle East's construction sector is poised for a significant challenge this year, as it faces increased costs attributed to inflation and evolving industry demands. A detailed study by Currie & Brown, a leader in cost management, project management, and advisory services, predicts construction cost increases in the UAE and Saudi Arabia in 2024. The UAE is expected to see a rise of 2-3%, while Saudi Arabia could experience a more substantial increase of 5-7%, continuing the trend from the previous year.

This expected surge in construction costs calls for the adoption of innovative processes and capabilities to maintain cost-effectiveness and adhere to project timelines. The report provides a guide for construction sector organizations to navigate uncertainties and enhance cost efficiency.

The analysis advocates for the adoption of novel work methodologies, such as modular construction, to mitigate local skill and material shortages. This strategy aims to offer more predictability in construction costs. Furthermore, the importance of fostering close collaboration among developers, consultants, and contractors is emphasized to ensure clearer project timelines and secure skilled labor in advance.

Emphasizing Sustainability and Digitization

The integration of sustainability principles and the adoption of digital technologies, including artificial intelligence and advanced data analytics, are highlighted as crucial for enhancing project ROI and managing challenges effectively. These steps can also help in reducing the overall carbon footprint and future investments of construction projects.

Global Context and Regional Specifics

Construction cost increases are expected globally due to inflation, despite some easing towards the end of 2023. The Middle East, however, faces additional challenges such as price volatility, tightened sustainability regulations, and competition for skilled labor and materials. Dubai's COP 28 pushed for stricter sustainability regulations, which, while potentially increasing initial costs, promise long-term operational savings through decarbonization.

Despite the myriad of challenges, including cost escalations and the need for sustainability and innovation, the construction sector in the Middle East has clear pathways to navigate these issues. By embracing new methodologies, focusing on sustainability, and leveraging digital technologies, the sector can ensure cost-effectiveness and successful project completions, contributing to the development of more sustainable and efficient built environments.