Saudi Arabia’s construction sector is entering a phase of a measured pace of growth through 2026 and 2027, according to JLL’s newly released Saudi Arabia Construction Market Review for H1 2026. Following years of record-breaking activity, the moderate and steady growth ahead reflects market maturation and a shift toward sustainable, long-term growth.
This growth is driven by recent policy changes, including Riyadh’s revised White Land Tax, which is accelerating construction activity and incentivizing the development of previously unutilized land parcels, providing fresh momentum to the market.
The development activity comes as Saudi Arabia navigates significant supply chain headwinds, with ongoing geopolitical tensions disrupting regional trade routes and resulting in upward pressure on commodity prices. Imported construction materials and equipment are seeing extended delivery timelines, creating scheduling risks, while trade policy shifts and constrained supply chains are increasing input costs for steel, aluminum, and cement.
“We are seeing an evolution in Saudi Arabia’s construction sector as it transitions from hyper-growth to a mature, sustainable phase,” said Maroun Deeb, Head of Project & Development Services MEA. “For developers and investors, this represents a structural shift in how major projects are delivered. As Public-Private Partnerships expand, success now relies on smarter procurement strategies to navigate supply chain challenges and drive the Kingdom’s long-term economic growth.”
Based on current market conditions and input-cost evidence from the first half of the year, JLL has adjusted its 2026 Tender Price Inflation (TPI) forecast to circa 5.0%, with a lower-bound estimate of 4.0% and an upper-bound estimate of 6.0%, up from a previously projected 4.0%. Cost escalation was concentrated in metal-intensive, import-dependent trades, with prices for key construction materials and fuels such as copper, aluminum, and diesel increasing by 44.5%, 23.9%, and 7.9%, respectively, in the year to August 2026.
Despite these cost pressures, the tendering environment remains fiercely competitive. Contractors are currently absorbing a portion of these increases through compressed margins, preventing realized inflation from climbing even higher.
Looking ahead, expanding opportunities in Public-Private Partnerships (PPP) across healthcare, education, and urban development are attracting a robust mix of local and international players, reflecting long-term sector resilience. JLL forecasts TPI to hold at circa 5.0% in 2027, within the same 4.0% to 6.0% range, as input-cost pressures persist and competitive tension continues in the market.
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