The decline in Saudi construction costs might be easing soon, though tough market conditions are set to prevail, according to a report by consultancy Colliers International.
While average construction costs fell by 3.1% in 2015 and 11.5% in 2016, the report estimates that they will fall further by 3.9% in 2017. Costs have dropped significantly since the oil price crisis started in 2014.
The report also noted that in some case contractors’ profits plummeted, sometimes to negative margins. The short-term outlook is not positive either despite the easing of cost declines since strong competition and downward pressure will continue to negatively affect the margins.