Knight Frank’s latest “Saudi Arabia Construction Landscape Review” reported that the total value of projects planned or underway across Saudi Arabia, under the ongoing “Vision 2030” socio-economic diversification agenda, reached USD 2.07 trillion in H1 2026.
Of the USD 2.07 trillion total project pipeline, USD 1.23 trillion comprises construction and real estate projects, while the remaining USD 940 billion is across power, transport, industrial, water, chemical, gas, and oil projects, as per the real estate consultant.
“Construction remains a major component of the Kingdom’s development activity, with construction-sector output forecast to reach approximately USD 190.4 billion in 2026, compared with USD 179.4 billion in 2025, before rising to around USD 250.2 billion by 2030,” Knight Frank stated further.
However, the real estate consultant sees the ongoing Iran war creating additional pressure across the Kingdom’s construction and development sector.
“Disruption to regional shipping and supply chains, alongside higher logistics and input costs, is creating risks around procurement, project timelines, and delivery costs, particularly for projects reliant on imported materials and equipment,” it stated further.
Faisal Durrani, Partner – Head of Research, MENA at Knight Frank, said, “The scale of Saudi Arabia’s project pipeline demonstrates the strength of the Kingdom’s long-term ambitions under Vision 2030. At USD 2.07 trillion, the pipeline reflects the breadth of development planned across the Kingdom, although it is important to recognize that projects are at different stages of planning and delivery.”
“At the same time, the ongoing regional conflict has created a materially more challenging delivery environment. Rising construction and logistics costs, potential supply chain disruption, and longer procurement and construction timelines are increasing pressure on project economics. Against this unprecedented backdrop, some projects may need to be rephased, revisited, or reassessed to ensure that they remain commercially viable and aligned with changing delivery conditions,” he remarked.
While approximately USD 293.1 billion worth of construction, industrial, and transport contracts were awarded across the Kingdom between 2020 and August 2026, Riyadh accounted for USD 135.4 billion, or approximately 46% of the total, including USD 96.1 billion of construction contracts and USD 34.8 billion of transport contracts.
Makkah Province followed with USD 48.1 billion, while the Eastern Province accounted for USD 39.9 billion.
Mohamed Nabil, Regional Partner – Head of Project and Development Services, MENA at Knight Frank, said, “The scale of Saudi Arabia’s construction pipeline remains significant, but the operating environment for developers and contractors has become considerably more demanding. The impact of the regional conflict is increasingly being felt at the project level through construction material costs, procurement, and delivery programs.”
Between January and July 2026, reinforcing steel bar prices rose by approximately 24%, iron-binding wire by 19.6%, and aluminum by 13.9%. These increases are adding pressure to project budgets at a time when supply-chain disruption and longer lead times are also complicating procurement.
“For developers and contractors, the implications extend beyond higher costs, with some projects potentially requiring changes to scope, phasing, or procurement strategy to remain deliverable and commercially viable,” Nabil said.
Knight Frank’s analysis shows that since 2025, residential construction costs have increased across all segments.
Standard villa construction costs have risen from SAR3,800–4,400 per sqm in 2025 to SAR4,100–4,800 per sqm in 2026, while high-end villa costs now range between SAR6,000 and SAR8,700 per sqm, compared with 2025’s ratio of SAR5,500–8,000 per sqm.
For apartments, standard construction costs have risen from SAR4,700–5,800 per sqm to SAR5,100–6,300 per sqm, while high-rise apartment construction costs have increased to as much as SAR10,800 per sqm, from SAR10,000 per sqm in 2025.
While construction cost pressures pre-date the Iran war, as per Knight Frank, further disruption to regional supply chains and logistics could add to cost pressures and make delivery timelines more difficult to predict.
Amar Hussain, Associate Partner – Research, MENA at Knight Frank, said, “Construction cost pressures were already evident before the latest escalation in regional conflict, but the current environment introduces additional risks regarding logistics, material availability, and delivery timelines. While the full impact is still emerging, sustained disruption to regional supply chains could place further pressure on project costs and schedules.”
“Against this backdrop, developers are likely to become increasingly selective around phasing and procurement, with greater scrutiny of project feasibility and the alignment of new supply with underlying demand,” the senior official concluded.