Ambitious Saudi Giga-Projects Drive Middle Eastern Construction Boom | Kanebridge News
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Ambitious Saudi Giga-Projects Drive Middle Eastern Construction Boom

Giga-projects in Saudi Arabia are significantly driving up construction costs, particularly in Riyadh.

Thu, Jun 20, 2024 2:05pmGrey Clock 3 min

According to Turner & Townsend‘s 2024 International Construction Market Survey (ICMS), a global professional services company, highlights that ambitious state-backed developments and giga-projects are propelling construction activities across the Middle East. The surge in investment, coupled with inflation reductions and economic diversification, is attracting global talent but also straining supply chain capacities.

Saudi Construction Costs

The report indicates that the rising demand in the Kingdom of Saudi Arabia is elevating construction costs. Riyadh leads the region with construction costs at $2,593 per m², benefiting from rapid growth. Both domestic and foreign investments are leveraging state-backed initiatives like NEOM and Vision 2030. Although construction cost inflation in Riyadh has eased from the 2023 peak of 7%, it is forecasted to remain high at 5% through 2024.

This demand surge is partially driven by increased construction in sports, leisure, and hospitality sectors as the country prepares for EXPO 2030 and the 2034 FIFA World Cup. The average cost of building a five-star luxury hotel in Riyadh is now $4,798 per m², while the price for a high-rise CBD office stands at $2,266 per m². However, the shortage of skilled labor is keeping costs elevated, as the country struggles to meet the demands of its ambitious projects.

The need for talent and resources for these giga-projects is also stretching the overall supply chain capacity across the Middle East. Doha ranks as the second most expensive market in the region at $2,096 per m². Following the high construction output leading up to the 2022 World Cup, inflation is expected to decrease from 3.5% in 2023 to 2.5% in 2024, reflecting a softening in demand as investment and skilled labor migrate to Saudi Arabia.

In neighboring Dubai, the average construction cost is $1,874 per m². The city’s growing population and high tourism rates continue to drive activity in residential development and hospitality sectors, supported by relatively low labor costs. Consistent market investment, fueled by foreign visitors and skilled migrants, is expected to result in a 5% increase in construction costs through 2024.

Strategic Recommendations

Turner & Townsend advises clients to prioritize procurement strategies and adopt innovative digital techniques to navigate potential labor hold-ups and maximize efficiency.

Mark Hamill, director and head of Middle East real estate and major programs at Turner & Townsend, noted: “Over the past year, we’ve seen the Middle East continue to be a hub of major growth and investment as the region aims to move beyond its economic dependence on oil.

“The stand-out story is the accelerated development of KSA, where vast ambitions are being realised via projects like The Line, King Salman Park and Diriyah Gate.

“Despite the KSA leading the pack in terms of activity in the Middle East, there remain considerable real estate opportunities in the UAE and Qatar as inflation cools.

“Nevertheless, with labour capacity being stretched across the region, clients will need to review their procurement and contracting models to help mitigate supply chain disruption and maximise the potential opportunities on offer.”

Global Construction Trends

The ICMS report, surveying 91 global cities, reveals that the US continues to dominate the rankings of the most expensive places to build, with six US cities in the top ten. New York retains its position as the most expensive market globally at an average cost of $5,723 per m².

Worldwide deglobalisation trends and nearshoring prompted by supply chain disruption and geopolitical tensions are seeing growth and investment in manufacturing, especially in emerging international markets such as Malaysia, Indonesia, Nigeria, Brazil and Mexico.

Labour constraints remain a significant inflationary factor globally, and all but three of the 91 markets surveyed reported an impact from a shortage of skills.



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MS Homes Developers Launches ‘ILUKA Residences’ on Dubai Islands

ILUKA Residences is the first of many planned developments in the pipeline; aims to build over one million sq. ft. of residential projects in the UAE by 2027.

Fri, Jul 12, 2024 3 min

MS Homes Developers is making its debut in Dubai’s thriving real estate market with the launch of ILUKA Residences on Dubai Islands. This inaugural project is an eight-floor residential building situated on Marina Boulevard, offering a refined lifestyle in the heart of Dubai Islands. ILUKA Residences features 57 luxury apartments, including 1 to 4-bedroom units, with handover scheduled for the third quarter of 2026.

Since its founding in 1983 in Pakistan, MS Homes Developers has successfully delivered over 20,000 residential units and expanded into the United States, the United Kingdom, and the Middle East. Its recent entry into the UAE market with this project on Dubai Islands signifies a long-term commitment, with plans for developing over 1 million square feet by 2027.

“Dubai’s global fame for luxury seaside living has made it a primary destination for residents looking for luxurious homes that offer high quality features and amenities, and an unparalleled lifestyle by Dubai’s crystal waters,” said Mohsin Sheikhani, founder and CEO of MS Homes Developers. “MS Homes Developers wants to create a truly unique living experience at ILUKA Residences, inspired by the shape of the waves and blending seamlessly with the beauty of the Dubai Islands.”

Residents of ILUKA Residences will enjoy 15 exquisite amenities including luxurious private pools in all the apartments and a breathtaking infinity pool with the endless view of the horizon providing a sublime retreat for a truly elevated living experience. Amenities also include a fitness studio, sauna and steam room, yoga area, urban forest, a cinema, splash pads with stylish sun loungers, sky lounge, gaming facility, kids play area, an outdoor terrace and an open-air barbeque area for a delightful dining experience.

ILUKA Residences offer a serene escape from the hustle and bustle of the city while keeping everything residents need within reach. All apartments come with a fully equipped kitchen, exquisite finishing, spacious rooms and breathtaking views. The project seamlessly combines modern comfort with a touch of luxury, creating an ambiance that sets the tone for exceptional living.

Residents will benefit from the project’s strategic location, offering easy access to prominent destinations and to the city center, ensuring residents are always just moments away from the vibrant pulse of Dubai. Dubai Islands community offers a rejuvenating vacation destination for luxury escape, a thriving sports culture and a focus on making wellness a way of living in Dubai. Whether it’s the bustling Downtown district, prestigious business hubs, or serene waterfronts, ILUKA residents enjoy unparalleled accessibility to everything Dubai has to offer, embracing a lifestyle where convenience meets luxury.

With 4 decades of real estate, construction and development experience, Mr. Sheikhani and the management of MS Homes Developers have built a significant portfolio of properties with over US$ 1 billion in sales.  A visionary entrepreneur and industry veteran, Mr. Sheikhani also serves as the Chairman of the Association of Builders and Developers in Pakistan where he also collaborates with the Government of Pakistan to champion initiatives that support the construction industry and the property sector as a whole.

 

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