The construction costs across Saudi Arabia surged by 1.9 per cent during the third quarter compared to the same period last year mainly driven by key industry issues linked to workload and labour, said a report by Canadian real estate expert Colliers International.

The procedures implemented by Saudi Arabia to carry out nationalisation in various sectors, as well as taxes imposed on expatriates, have contributed to raising labour’s costs in the nation, stated Colliers in its report.

The Canadian company further pointed out that over the last one year, the project pricing has been “very aggressive” on the back of competition for work.

As for profit margins of contractors, the Canadian real estate expert said it did not expect a growth in the near future until the real estate firms fill their order books.

It will take significantly more projects to commence, to have a real impact on increasing margins that contractors will include within their bids. A such, reduced competition is predicted to have a minor impact on tender pricing over the next 12 months, it stated.

The tender price inflation’s average for construction costs would be 1.8 per cent in the coming 12 months, said the expert.

However, the numerous projects that have been announced by the Saudi government over the last 12 months would help to bring optimism to the industry, it added.-TradeArabia News Service