Saudi Arabia is the cheapest country in the region for construction


The annual International Construction Cost report by EC Harris has revealed that Saudi Arabia is the cheapest country and Bahrain is the most expensive country in the Middle East to build in.

According to the EC Harris survey, which benchmarks the cost of building in each country against the UK, the price of construction in Bahrain is the same as in the UK, and 6 per cent greater than in Qatar, their closest Middle East neighbour on the list and means Bahrain is listed in the top twenty of the most expensive countries around the world.

Saudi Arabia emerged as the cheapest country in the Middle East when it comes to construction, finishing 17 places below Oman and in 37th place overall. The figures revealed that it was almost half as expensive to build in Saudi Arabia as in Bahrain whilst the Kingdom was 37 per cent and 34 per cent cheaper when compared to Qatar and the United Arab Emirates.

Smith added: "The Saudi market has traditionally been the most competitive market for contractors, resulting in lower overhead & profit allocations than in the UAE or other GCC countries. Furthermore, the abundance of available raw materials and steel factories also play a significant role in keeping construction costs lower, with the price of key commodities like steel and concrete typically 10% lower than elsewhere across the region."

Qatar finished in 15th position overall with construction costs more expensive than larger nations including the US, Russia and China.

Nick Smith, Regional Head of Cost and Commercial Management in the Middle East, said: "With the 2022 FIFA World Cup now confirmed, Qatar could soon emerge as the most expensive place for construction in the Middle East particularly if there is any misalignment between supply and demand in the short to medium term. This is likely to be a slow burning process though as whilst ambitious programmes of work are being discussed, it will take a while before construction work actually begins."

The United Arab Emirates completed the top three of the most expensive countries in the Middle East in which to build, with construction costs deemed to be 9 per cent cheaper than in Bahrain and 3 per cent lower than in neighbouring Qatar.

Oman finished in fourth place overall when ranked against other countries in the region, and just made it in to the top twenty list with construction costs that were 11 per cent below the baselines figures set by Bahrain and the UK.

The research also noted that inflationary pressures are expected to be very similar in the UAE and Saudi Arabia, although global energy demand could mean inflation is significantly higher in Qatar. By mid 2012 construction costs across the GCC may be very different to historic performance, with KSA prices rising at a sustainable pace and prices in Qatar reaching similar levels to those witnessed at the end of 2007.

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