2 min read
Construction Costs Expected to Rise Globally in 2024
by
Anna Fischer
Published 26 Feb 2024
Construction costs are expected to rise globally in 2024, posing significant challenges for the industry.
In the United Arab Emirates (UAE), a 2-3% increase is forecast, while Saudi Arabia may experience a more pronounced rise of 5-7%. Similarly, in the United States, costs are projected to escalate by 3% to 6%, following an average increase of 4% in the previous year.[?]
In the United Arab Emirates (UAE), a 2-3% increase is forecast, while Saudi Arabia may experience a more pronounced rise of 5-7%. Similarly, in the United States, costs are projected to escalate by 3% to 6%, following an average increase of 4% in the previous year.[?]
Source: Pexels
This upward trend in construction costs is expected to test construction firms, necessitating the development of innovative processes and capabilities to control costs and ensure project delivery remains on track.
In response to these challenges, Currie & Brown has provided guidance aimed at helping organizations navigate the uncertain terrain. They advocate for the adoption of new methodologies, such as modular construction, to alleviate the impact of local skills and materials shortages. Furthermore, fostering close collaboration among developers, consultants, and contractors is highlighted as a crucial factor in enhancing clarity on project schedules and securing skilled labor early in the process.
Another key recommendation emphasizes the incorporation of sustainability practices at every stage of development. By considering the carbon footprint of projects from inception, firms can align with current and future standards, potentially reducing the need for additional investments down the line. Moreover, embracing digitization through technologies like artificial intelligence (AI) and advanced data analytics is encouraged. Such technologies offer opportunities to optimize project returns on investment (ROI) and effectively predict and manage future challenges.
Earlier, we explored the potential for the Middle East construction sector to attain its net-zero emissions objective through the adoption of sustainable technologies.
In response to these challenges, Currie & Brown has provided guidance aimed at helping organizations navigate the uncertain terrain. They advocate for the adoption of new methodologies, such as modular construction, to alleviate the impact of local skills and materials shortages. Furthermore, fostering close collaboration among developers, consultants, and contractors is highlighted as a crucial factor in enhancing clarity on project schedules and securing skilled labor early in the process.
Another key recommendation emphasizes the incorporation of sustainability practices at every stage of development. By considering the carbon footprint of projects from inception, firms can align with current and future standards, potentially reducing the need for additional investments down the line. Moreover, embracing digitization through technologies like artificial intelligence (AI) and advanced data analytics is encouraged. Such technologies offer opportunities to optimize project returns on investment (ROI) and effectively predict and manage future challenges.
Earlier, we explored the potential for the Middle East construction sector to attain its net-zero emissions objective through the adoption of sustainable technologies.
These measures can help mitigate the impact of escalating construction costs while contributing to the development of better, more sustainable built environments.
Doug McGillivray
Managing Director of Southern Gulf
The Middle East Construction Sector Faces Its Own Challenges
Currie & Brown predicts cost increases across every one of its operating regions in the year ahead. Inflation remains a primary challenge, with unpredictable price swings persisting across the Gulf.
Sustainability regulations are tightening, driven by events like COP28 hosted in Dubai, leading to short-term cost increases but long-term operational cost reductions. Skills and materials shortages further drive up costs, exacerbated by strained supply chains and competition for skilled staff. Geopolitical turmoil adds to the uncertainty, with ongoing conflicts impacting trade routes and insurance costs.
Despite these challenges, McGillivray emphasizes the importance of addressing long-term trends to provide greater certainty in the future. Collaboration between the industry and clients is essential in developing solutions to mitigate cost drivers and navigate the evolving landscape of the construction sector.
Sustainability regulations are tightening, driven by events like COP28 hosted in Dubai, leading to short-term cost increases but long-term operational cost reductions. Skills and materials shortages further drive up costs, exacerbated by strained supply chains and competition for skilled staff. Geopolitical turmoil adds to the uncertainty, with ongoing conflicts impacting trade routes and insurance costs.
Despite these challenges, McGillivray emphasizes the importance of addressing long-term trends to provide greater certainty in the future. Collaboration between the industry and clients is essential in developing solutions to mitigate cost drivers and navigate the evolving landscape of the construction sector.
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