JLL: The construction market in Saudi Arabia is moving to a stage of maturity

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JLL said that the construction sector in the Kingdom of Saudi Arabia is entering a phase of growth expected during the years 2026 and 2027.

The company added, in its new report on the construction market in the Kingdom during the first half of 2026, that after years of record activity, the moderate and stable growth expected during the next phase reflects the maturity of the market and the shift towards achieving sustainable growth in the long term.

This growth comes as a result of recent policy changes, including amending the “white land fees” system in Riyadh, which contributes to accelerating the pace of construction work and stimulating the development of plots of land that were previously unexploited, adding new momentum to the market.

Maroun Deeb, Head of Project and Development Services for the Middle East and Africa at JLL, said: “We are witnessing a clear development in the Saudi construction sector, as it moves from a stage of rapid growth to a stage of maturity and sustainability. For developers and investors, this represents a structural shift in the way major projects are implemented. With the expansion of partnerships between the public and private sectors, success today depends on smarter procurement strategies to deal with supply chain challenges and drive long-term economic growth in the Kingdom.”

Based on current market conditions and input cost indicators recorded in the first half of the year, JLL has revised its tender price inflation forecast for 2026 to approximately 5.0%, with a lower bound of 4.0% and a higher bound of 6.0%, compared to its previous forecast of 4.0%.

The rise in costs has been concentrated in sectors that rely heavily on minerals and imports. The prices of major construction materials and fuel, such as copper, aluminum, and diesel, witnessed an increase of about 44.5%, 23.9%, and 7.9%, respectively, during the period extending until August 2026.

Despite these cost pressures, the tendering environment is very competitive, and contractors are currently bearing part of the burden of these increases by reducing profit margins, thus preventing realized inflation from rising to higher levels.

Looking to the future, the growing opportunities in public-private partnerships across the healthcare, education and urban development sectors are attracting a strong group of local and international companies, reflecting the long-term resilience of these sectors.

JLL expects bid price inflation to stabilize at around 5.0% in 2027, within the same range of 4.0% to 6.0%, as input cost pressures and market competition remain intense.