JLL raises Saudi construction tender-price forecast to 5%
Saudi Arabia’s construction sector is entering a more measured phase, according to JLL’s Saudi Arabia Construction Market Review for H1 2026. After several years of record activity, the consultancy expects moderate, steady expansion through 2026 and 2027. JLL describes the shift as a move towards longer-term, sustainable growth.
JLL identifies recent policy changes as one source of momentum. It points in particular to Riyadh’s revised White Land Tax, which it says is encouraging developers to build on previously unused plots. The review presents this as a factor supporting activity in the market.
Cost pressures are rising alongside that growth outlook. JLL says geopolitical tensions are disrupting regional trade routes and pushing up commodity prices. Imported materials and equipment are taking longer to arrive, creating scheduling risks, while the costs of steel, aluminium and cement are increasing.
In response, JLL revised its 2026 tender price inflation (TPI) forecast to around 5.0 per cent, within a range of 4.0 to 6.0 per cent. Its previous forecast was 4.0 per cent. The sharpest increases were in metal-heavy trades reliant on imports.
For the year to August 2026, JLL reports that copper rose by 44.5 per cent, aluminium by 23.9 per cent and diesel by 7.9 per cent. The review says competition among bidders remains intense. Contractors are absorbing part of the increases through tighter margins, which has limited the rise in realised inflation.
Maroun Deeb, JLL’s Head of Project & Development Services MEA, said the sector was transitioning from hyper-growth to a mature, sustainable phase. He said this represents a structural shift in how major projects are delivered. For developers and investors, he highlighted smarter procurement strategies to manage supply-chain challenges as Public-Private Partnerships expand.
JLL sees growing opportunities for PPPs in healthcare, education and urban development, with local and international players participating. It expects TPI to remain around 5.0 per cent in 2027, within the same 4.0 to 6.0 per cent range. The review says cost pressures are expected to persist while competition continues.
