JLL raises Saudi TPI forecast to 5% for 2026-2027

JLL has raised its 2026 tender price inflation (TPI) forecast for Saudi Arabia’s construction sector to around 5%, up from a previously projected 4%, amid rising construction costs and supply chain disruptions.

The TPI is expected to hold at 5% in 2027, the global consultant said in its latest Saudi Arabia Construction Market Review for H1 2026.

JLL also forecasts TPI to hold within the same 4% to 6% range, as input-cost pressures persist and competitive tension continues in the market, the report said.

Cost escalation was concentrated in metal-intensive, import-dependent trades, with prices for key construction materials and fuels such as copper, aluminum, and diesel rising 44.5%, 23.9%, and 7.9%, respectively, in the year to August 2026.

Amid ongoing geopolitical tensions, procurement, pricing, and project timelines are being reshaped across the Kingdom, with impacts varying by project location and stage.

Contractors are currently absorbing a significant portion of the escalating price increases through compressed profit margins. This is largely driven by a competitive tendering environment, which is temporarily shielding developers from the full impact of market inflation.

This growth is driven by recent policy changes, including Riyadh’s revised White Land Tax, which is accelerating construction activity and incentivizing the development of previously unutilized land parcels, providing fresh momentum to the market.

JLL said that, looking ahead, expanding opportunities in public-private partnerships (PPPs) across healthcare, education, and urban development are attracting a robust mix of local and international players, which shows long-term sector resilience.

“We are seeing an evolution in Saudi Arabia’s construction sector as it transitions from hyper-growth to a mature, sustainable phase,” said Maroun Deeb, Head of Project & Development Services MEA, JLL.

As PPPs expand, he added that success now depends on smarter procurement strategies to navigate supply chain challenges and drive the Kingdom's long-term economic growth.