The Middle East construction sector remains strong, with Saudi Arabia leading the way. According to the Q2 2024 RICS Global Construction Monitor, the region’s Construction Activity Index (CAI) reached +24 pct, marking its 14th consecutive quarter of growth, though slightly down from +26 pct in Q1.
Saudi Arabia’s CAI stands at +64 pct, maintaining its global leadership despite a slight drop from 72 pct. The UAE follows with a CAI of +54 pct, showing strong growth in residential, commercial, and public sector projects. Oman also reported positive growth, while Bahrain (-8 pct) and Qatar (-28 pct) faced declines, with Qatar’s construction activity suffering post-FIFA World Cup.
Despite the sector’s overall optimism, it faces financial constraints, rising material costs, and a shortage of skilled workers. Financial constraints were identified by 80 pct of respondents as the biggest challenge, with material costs close behind at 77 pct.
Saudi Arabia’s high workload is driving up costs and impacting delivery, while competition for talent with Saudi Arabia is increasing costs in the UAE. Optimism remains, with expectations for future workloads and profit margins improving. The private residential sector shows the most growth potential, with a 12-month reading of +32 pct compared to the current +12 pct. The infrastructure sector continues to lead in current and 12-month workload indicators. Profit margins are currently negative at -4 pct but are expected to improve to +22 pct over the next year. New business enquiries increased, with the net balance rising to +20 pct in Q2, up from +15 pct in Q1, driven by strong trends in Saudi Arabia (+69 pct) and the UAE (+54 pct).
