Compass Releases H1 2026 Construction Cost Benchmark Report for Saudi Arabia and UAE

en.Wedoany.com Reported - Project development consultancy Compass Project Consulting has released the ninth edition of its Construction Cost Benchmark Report, covering Saudi Arabia and the UAE, outlining the current landscape of construction costs in the Middle East following a period of geopolitical uncertainty.

In the first half of 2026, new pressures emerged across regional supply chains and project delivery environments, with budgets, procurement, and project feasibility coming under greater scrutiny. The construction sectors in Saudi Arabia and the UAE continued to grow, driven by active development pipelines and sustained investment in key areas. Geopolitical conflicts added new complexity for project teams, with pressure primarily reflected in price volatility for critical materials and MEP equipment—including aluminum and copper—as well as rising transportation and insurance costs. Disruptions to shipping routes delayed timelines, while higher oil and diesel prices pushed up operating costs for plants and on-site equipment.

Francisco Batista, Regional Director of Commercial and Cost Management at Compass, stated that as contractors navigate market uncertainty, bid pricing has begun to reflect higher material, transportation, and installation costs. He noted that similar behavior was observed during the early stages of COVID-19, when market visibility was limited and pricing turned defensive; this stance is expected to stabilize as supply chains adjust and market conditions become clearer.

Despite the disruptions, Compass found no evidence in H1 2026 to support substantive adjustments to overall benchmark rates in Saudi Arabia. Some projects experienced cost pressures related to specialized MEP equipment, material supply, shipping, and logistics, but these impacts tended to be project-specific rather than market-wide.

Headquartered in Riyadh with operations across the Gulf region, Compass offers development management, project management, procurement management, construction supervision, and commercial management solutions. The report draws on cost data from more than 1,000 commissioned projects across the Gulf Cooperation Council (GCC) region, providing benchmark ranges for construction and fit-out works across a variety of asset classes, including residential developments, hospitality projects, mixed-use developments, food and beverage (F&B) concepts, commercial offices, and retail spaces.

Batista noted that there is now a stronger focus on project viability and commercial performance, with budgets under closer scrutiny, yet the willingness to move projects forward remains, with a substantial number of developments already underway or committed. He believes that current uncertainty is typically addressed not through across-the-board increases in benchmark rates, but through higher contingency allowances, more cautious procurement strategies, and additional risk provisions in pricing.

In the UAE, certain hospitality and F&B projects are being reassessed in response to changing market conditions. Seasonal maintenance programs proceeded as scheduled during the summer months, while large-scale residential and infrastructure developments continued, with greater attention given to schedule certainty and cost control.

Hamed Aljufairi, Chief Operating Officer at Compass, stated that the first half of the year highlighted the value of current market intelligence. Changes in supply conditions and procurement behavior can quickly impact project assumptions, and reliable benchmark data helps teams test budgets, challenge assumptions, and make decisions with greater confidence.

Compass assesses that, despite regional disruption in H1 2026, current market conditions do not yet justify upward adjustments to overall construction benchmark rates. Evolving geopolitical risks will continue to be treated primarily as project-specific considerations unless they begin to more persistently affect bid pricing, actual project costs, or successfully concluded contractor claims.