Saudi construction costs ‘down 10-15%’
Cuts in government spending have eased pressure on building material suppliers, says CEO of Emaar the Economic City
The group chief executive of Emaar the Economic City (EEC) has said that Saudi Arabian construction firms have become more competitive on pricing, with costs dropping by 10% to 15% per square metre.
Fahd Al Rasheed told Reuters that EEC is paying as much as 15% less towards construction costs as a result of cuts in state spending. These cuts have reduced pressure on supplies of building materials and labour in the Kingdom, he explained.
“Local production levels for all building materials – as well as imports – were set for a time of boom in contracting, which has caused oversupply,” Al Rasheed was quoted as saying by Reuters.
“Also, now that the number of contracts being issued by the government is much lower, contractor capacity has also improved, leading to contractors lowering their margins to compete for new work.”
Since 2015, Saudi Arabia has slashed spending on its construction projects as it looks to curb a major budget deficit caused by the decline in oil prices. This has reduced the demand for construction materials, and as a result the government has lifted a ban on exporting cement and steel.
EEC is a consortium that is affiliated with Emaar Properties Group. It is developing the King Abdullah Economic City, which is a massive industrial, business and residential zone on the Red Sea coast.
