Project development consultancy Compass Project Consulting has released the ninth edition of its latest Construction Cost Benchmark Reports for Saudi Arabia and the UAE, offering a current snapshot of construction costs following a period shaped by geopolitical uncertainty across the Middle East.
The first half of 2026 brought renewed pressure across regional supply chains and project delivery environments, creating additional scrutiny around budgeting, procurement and project viability. Against that backdrop, the Saudi Arabia and UAE construction sectors continued to demonstrate strength, supported by active development pipelines and sustained investment across key sectors.
The conflict has introduced a new layer of complexity for project teams. Pressure is being felt through volatility in key materials and MEP equipment, including aluminium and copper, alongside higher transport and insurance costs. Disruption to shipping routes has also created programme uncertainty, while increased oil and diesel prices have affected the cost of operating plant and site equipment.
“Tender returns started reflecting higher allowances for materials, transport and installation as contractors responded to uncertainty in the market,” said Francisco Batista, Regional Director – Commercial & Cost Management. “We saw similar behaviour during the early stages of COVID-19, when visibility was limited and pricing became more defensive. As supply chains adjust and market conditions become clearer, we expect that position to stabilise.”
Despite the disruption, Compass has not seen evidence to support a material adjustment to overall benchmark rates in Saudi Arabia during H1 2026. While some projects have experienced cost pressure linked to specialist MEP equipment, material availability, shipping and logistics, these impacts have tended to be project-specific rather than market-wide.
Headquartered in Riyadh and operating across the Gulf, Compass provides solutions across development management, project management, procurement management, construction supervision and commercial management, supporting organisations responsible for delivering some of the region’s most significant development programmes.
The reports draw on cost data from Compass’ portfolio of more than 1,000 commissions across the GCC and provide benchmark ranges for construction and fit-out works across multiple asset classes. Coverage includes residential developments, hospitality projects, mixed-use schemes, F&B concepts, commercial offices and retail destinations.
“There is now even greater focus on feasibility and commercial performance,” said Batista. “Budgets are being scrutinised more closely, but the appetite for moving projects forward remains. Activity levels are still strong and a significant number of developments are already underway or committed. Rather than driving broad increases in benchmark rates, the current uncertainty is generally being managed through higher contingencies, more cautious procurement strategies and additional risk allowances within pricing.”
In the UAE, some hospitality and F&B projects are being re-evaluated as developers respond to changing market conditions. At the same time, seasonal maintenance programmes are progressing in-line with the summer period, while larger residential and infrastructure developments continue to advance, with increased attention being paid to programme certainty and cost control.
“The first half of the year reinforced the value of current market intelligence,” said Hamed Aljufairi, Vice President – Operations. “Changes in supply conditions and procurement behaviour can quickly affect project assumptions. Access to reliable benchmark data helps teams test budgets, challenge assumptions and make decisions with greater confidence. “
Despite the disruption experienced across the wider region during H1 2026, Compass’ assessment is that current market conditions do not yet justify an upward adjustment to overall construction benchmark rates. The consultancy expects evolving geopolitical risks to continue being treated primarily as project-specific considerations unless they begin to feed more consistently into tender pricing, realised project costs or successfully concluded contractor claims.
The H1 2026 Construction Cost Benchmark Reports are available to download from Compass’ website www.compass-pc.com
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