Saudi Arabia is undergoing an ambitious transformation. With a project pipeline valued at over US$1.7tn, the Kingdom’s construction sector is experiencing huge momentum. Yet with opportunity comes complexity, from cost pressures and skills shortages to global supply chain disruption. Our latest Kingdom of Saudi Arabia market intelligence report provides an in-depth analysis of the trends, challenges and opportunities shaping the market in 2025.
Economic overview
Diversification remains the cornerstone of Saudi Arabia’s economic growth. In 2024, real Gross Domestic Product (GDP) rose by 1.5 percent year-on-year, supported by a 4.3 percent expansion in non-oil activities.
Inflation is steady at around 2.0 percent, though housing and utility costs are rising, with rents having increased to 11.6 percent. Sectors such as real estate, infrastructure and tourism are also attracting record levels of investment, reinforcing the economy’s resilience.
Beyond the giga projects
Almost US$1tn has been invested into tourism, sports, leisure and hospitality in Saudi Arabia, generating 1.6mn jobs. This is reshaping the Kingdom’s social and economic landscape. Industrial and logistics hubs are in high demand, with warehouse occupancy in Riyadh and Jeddah at over 97 percent. This is fuelled by e-commerce and the National Industrial Development and Logistics Programme.
Mining and digital infrastructure are also expanding at pace. With an estimated US$2.5tn in untapped mineral resources and over US$14.9bn committed to AI and cloud technologies at LEAP 2025, these emerging industries are poised to become key drivers of economic diversification.
Pressures changing the market
Riyadh is now among the most expensive cities to build in, with average construction costs rising to US$3,112 per m².
Demand for skilled labour remains high. This is especially true in mechanical engineering and plumbing (MEP) trades, finishing roles and green-collar jobs. This is creating competition across the supply chain. Procurement is under pressure and equipment lead times are now up to 25 weeks.
Despite these challenges, the outlook remains strong. Profit margins in areas like office fit-outs could reach 15 percent. New procurement laws, digital construction methods and Saudisation initiatives, are reshaping delivery strategies. These changes aim to improve performance and efficiency.
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