JLL raises Saudi 2026 tender price inflation forecast to 5%

Riyadh, Saudi Arabia - JLL has raised its 2026 tender price inflation (TPI) forecast for Saudi Arabia to circa 5.0%, up from a previously projected 4.0%, in its newly released Saudi Arabia Construction Market Review for H1 2026.

The review expects the Kingdom’s construction sector to grow at a measured pace through 2026 and 2027. Following years of record-breaking activity, JLL said the moderate and steady growth ahead reflects market maturation and a shift towards sustainable, long-term growth.

Costs rise on supply chain disruption

The revised forecast carries a lower-bound estimate of 4.0% and an upper-bound estimate of 6.0%. It is based on current market conditions and input-cost evidence from the first half of the year.

Cost escalation was concentrated in metal-intensive, import-dependent trades. In the year to August 2026, copper prices rose by 44.5%, aluminium by 23.9% and diesel by 7.9%.

JLL said ongoing geopolitical tensions are disrupting regional trade routes and putting upward pressure on commodity prices. Imported construction materials and equipment are seeing extended delivery timelines, creating scheduling risks, while trade policy shifts and constrained supply chains are increasing input costs for steel, aluminium and cement.

Procurement, pricing and project timelines are being reshaped across the Kingdom, with the impact varying by project location and stage.

The tendering environment remains fiercely competitive. Contractors are absorbing a significant portion of the increases through compressed profit margins, which is temporarily shielding developers from the full weight of market inflation and preventing realised inflation from climbing even higher.

White Land Tax speeds up development

Growth is being driven by recent policy changes, including Riyadh’s revised White Land Tax, which JLL said is accelerating construction activity and encouraging the development of previously unutilised land parcels.

The tax discourages speculative landholding and unlocks the supply of vacant land for development. According to JLL, the resulting increase in land for active development is softening land values and creating structured, long-term opportunities for developers and investors.

Maroun Deeb, Head of Project & Development Services MEA at JLL, said: “We are seeing an evolution in Saudi Arabia’s construction sector as it transitions from hyper-growth to a mature, sustainable phase. For developers and investors, this represents a structural shift in how major projects are delivered. As Public-Private Partnerships expand, success now relies on smarter procurement strategies to navigate supply chain challenges and drive the Kingdom’s long-term economic growth.”

TPI forecast to hold in 2027

Opportunities in Public-Private Partnerships (PPP) across healthcare, education and urban development are attracting a strong mix of local and international players, which JLL said reflects long-term resilience in the sector.

JLL forecasts TPI to hold at circa 5.0% in 2027, within the same 4.0% to 6.0% range, as input-cost pressures persist and competitive tension continues in the market.