Saudi Arabia aims to become the world's largest construction market by 2028

Saudi Arabia is poised to become the world's largest construction market by 2028 with massive investments in huge infrastructure, energy and housing projects. According to global project management consultancy Currie & Brown, construction costs in the country will rise between 5% and 7% this year. While price increases in key materials such as steel, cement, glass, aluminum and air conditioning systems are pushing up costs, labor demand is also rising rapidly. It's a similar story in the UAE, where cost increases are expected to be between 2% and 5%, especially as projects in Dubai and Abu Dhabi continue unabated.

In Saudi Arabia, mega projects such as Neom, Jeddah Tower, Mukaab in Riyadh and the world's largest water park in Qiddiya are boosting the country's construction activity. While Neom alone is reported to consume one-fifth of the world's steel production, these giant projects are putting great pressure on labor and material supply. In the UAE, the reconstruction of Palm Jebel Ali, the Wynn Resort in Ras Al Khaimah and industrial infrastructure projects in Abu Dhabi are among the notable investments.

However, there are some factors that challenge the construction industry in the region. Security issues in the Red Sea and the war in Gaza have disrupted the supply chain. Seeking to address these issues, Saudi Arabia is prioritizing Vision 2030 projects by encouraging local production. The Public Investment Fund's (PIF) acquisition of a 30% stake in construction material supplier Masdar is seen as part of this strategy. Although prices are expected to stabilize as material production is localized, labor shortages are expected to persist due to the size of the projects.

As construction activity in the region rapidly increases, this is also reflected in the insurance sector. Insurance companies see the huge investments in Saudi Arabia as an opportunity and continue to offer competitive rates. The fact that the country will host major events such as the 2029 Asian Winter Games, the 2030 Expo and the 2034 FIFA World Cup shows that the construction sector will gain even more momentum in the coming years.