Saudi Arabia emerges as the cheapest place to build across the Middle East, EC Harris said in its latest annual "International construction cost report". Building in Bahrain costs more than anywhere else in the Middle East, the report said. The figures indicated that it was almost half as expensive to build in Saudi Arabia as in Bahrain. In contrast, costs are highest in Europe, with Switzerland, Denmark and Sweden topping the list. The study by EC Harris looks at construction costs in 56 countries around the world, providing an indicative cost range per m2 across a range of residential and non-residential building types. These are then indexed against a benchmark, where a score of 100 is equivalent to the cost per m2 in the south-east of the UK. Based on this scale, the cost per m2 in Switzerland came in highest at 140 to 203, followed by Denmark at 119 to 172 and Sweden at 109 to 141. The cheaper countries in Europe as far as construction costs were concerned were Bulgaria (38 to 66), Macedonia (45 to 62) and Ukraine (45 to 65). Construction costs in the Gulf were in line with those in Europe, around the 100-mark, although Saudi Arabia was notably cheap at 38 to 75. The five African countries surveyed -Algeria, Ghana, Morocco, South Africa and Tunisia also had low construction costs, ranging from 31 to 63. "The Saudi market has traditionally been the most competitive market for contractors, resulting in lower overhead & profit allocations than in the UAE or other GCC countries. Furthermore, the abundance of available raw materials and steel factories also play a significant role in keeping construction costs lower, with the price of key commodities like steel and concrete typically 10 percent lower than elsewhere across the region," said EC Harris Regional Head of Cost and Commercial Management in the Middle East Nick Smith. The research also noted that inflationary pressures are expected to be very similar in the UAE and Saudi Arabia, although global energy demand could mean inflation is significantly higher in Qatar. The annual International Construction Cost Comparison report, now in its seventh year, was carried by EC Harris' offices across the globe. The final results are based on cost data in m² for a wide spectrum of building types including industrial, offices, retail and residential, all of which are assumed to be built to an international standard. According to the survey, which benchmarks the cost of building in each country against the UK, the price of construction in Bahrain is the same as in the UK, and 6 percent greater than in Qatar, the closest Middle East neighbor on the list. Qatar finished in 15th position overall with construction costs more expensive than larger nations including the US, Russia and China. "With the 2022 FIFA World Cup now confirmed, Qatar could soon emerge as the most expensive place for construction in the Middle East particularly if there is any misalignment between supply and demand in the short to medium term," said Smith. "This is likely to be a slow burning process though as whilst ambitious programs of work are being discussed, it will take a while before construction work actually begins." The United Arab Emirates completed the top three of the most expensive countries in the Middle East in which to build, with construction costs deemed to be 9 percent cheaper than in Bahrain and 3 percent lower than in neighboring Qatar. Oman finished in fourth place overall when ranked against other countries in the region, and just made it in to the top 20 list with construction costs that were 11 percent below the baseline figures set by Bahrain and the UK. In Asia, the cheapest countries included Taiwan (22 to 44), Sri Lanka (24 to 31) and India (24 to 33), while china was also at the lower end of the spectrum, scoring 37 to 52. The more expensive markets included Hong Kong, Singapore and South Korea, with japan topping the regional scores at 107 to 141. Other markets surveyed included Australia (95 to 131), and the US (68 to 106). Simon Rawlinson, head of strategic research and insight at EC Harris, said "higher commodity prices continue to present problems, particularly in low cost countries where they can make a big impact on construction prices. In contrast, continuing economic problems and weak demand in parts of Western Europe mean that the supply chain continues to absorb price rises. Slow recovery in the US means that construction prices have moved little since last year."
