Construction costs are set to increase across the Middle East region this year amid fresh challenges for the sector in the form of inflation, according to a report published by Currie & Brown, a world-leading provider of cost management, project management and advisory services.

Building costs in the UAE will surge by 2 to 3 per cent, and Saudi Arabia by 5 to 7 per cent in 2024, following an increase of 3 per cent and 7 per cent, respectively, last year, the report said.

The likely increases will challenge construction firms, which will need to develop new processes and capabilities to keep costs under control and projects on track.

The findings are shared in Currie & Brown’s report ‘How to Navigate 2024: Balancing Challenge with Opportunity’.

To help organisations navigate uncertainty and be more cost effective, the report advises project teams to act in the following areas:

•   Adopt new ways of working, such as modular construction. This will help reduce the impact of local skills and materials shortages, giving greater certainty on construction costs;

•   Ensure close collaboration between developers, consultants and contractors, which will also lead to greater clarity on schedules so that skilled labour can be secured early;

•   Incorporate sustainability at every stage. Firms need to consider the carbon impact of projects at every stage of development to make sure these will meet current and future standards. Doing so will reduce the need for organisations to make further investments down the line. They will also benefit from operational efficiencies sooner, reducing the cost and whole life carbon impact of their estates; and

•   Embrace digitisation. From AI to advanced data analytics, digital technologies are offering new ways to enhance project ROI and predict and manage future challenges. Organisations must be open-minded to the potential of new technologies and work together to apply them where they will add the most value to projects.

Doug McGillivray, Managing Director, Southern Gulf, said: “2024 will bring fresh challenges for the construction industry, but these also present opportunities for firms and their clients. By considering sustainability, embracing digital technologies, and developing new ways of working, both will benefit from operational efficiencies.”

“This will help mitigate the impact of construction cost increases now and in the future, while creating better, sustainable built environments for all,” he stated.  

The Middle East is not alone in experiencing spiralling construction costs. Currie & Brown predicts cost increases across every one of its operating regions in the year ahead. The extent of these varies from market to market, but common drivers are clear.

According to Currie & Brown, inflation remains the primary challenge for the construction industry and dominant driver of cost increases.