UAE, Saudi Arabia face spike in construction costs amid US tariff hike

Zawya

11-04-2025

The Middle East construction industry is expected to see further cost increases following new trade tariffs announced by US President Donald Trump, according to a new report.
The UAE is expected to see construction cost hikes of 2.7–3.3 percent while Saudi Arabia will see a 3.4–7 percent increase, UAE-based project management consultancy Stonehaven said in its 2025 UAE & KSA Construction Cost Benchmarking Report.
These figures are, however, conservative as markets react to global stock losses and supply chain disruptions, which are forecast to increase the prices for imported materials in the region.
With over $2.3 trillion in active projects across both countries, the GCC region is heavily exposed to international commodity pricing. The cost of construction is expected to surge over the next 18–24 months as key materials such as steel, concrete, and aluminum become more expensive to source, the report said, adding that hospitality, infrastructure, and residential sectors are among the most exposed.
'This is a stark wake-up call for the entire industry,' said Gordon Rodger, Managing Director at Stonehaven.
'We are facing a perfect storm — labour shortages, outdated processes, and increasing external pressures like global trade tariffs."
Developers need to act fast to lock in construction costs that align with their feasibility studies, or they risk serious impacts to their bottom line, he added.
(Writing by P Deol; Editing by Anoop Menon)