ksa | benchmarking update november 2016 · commercial(shell and core only) 8 office low to medium...
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Colliers International | KSA Construction Cost Benchmarking and Forecasting | Update - November 2016
(Source: Colliers International November 2016)
KSA | BENCHMARKING UPDATE
FORECASTED
2016 (4th Qtr) 2017 (4th Qtr)
Item Building TypeCost Range
(SAR/m2)
Cost Range
(SAR/m2)
Residential
1 Villa - Low Specification 1,881 - 2,308 1,796 - 2,204
2 Villa - Medium Specification 2,574 - 3,274 2,471 - 3,143
3 Villa - Medium High Specification 3,347 - 4,445 3,230 - 4,289
4 Villa - High Specification 4,414 - 5,647 4,282 - 5,477
5 Apartment Low Rise - Low Specification 2,037 - 2,487 1,945 - 2,375
6Apartment Low to Medium Rise - Medium
Specification2,942 - 3,386 2,824 - 3,251
7 Apartment High Rise - High Specification 4,792 - 5,923 4,648 - 5,745
Commercial (Shell and Core Only)
8Office Low to Medium Rise - Medium
Specification2,520 - 3,618 2,411 - 3,463
9 Office High Rise - Medium Specification 3,328 - 4,077 3,184 - 3,901
10 Office High Rise - High Specification 4,207 - 5,124 4,072 - 4,960
Industrial
11 Light Duty Industry 1,715 - 2,541 1,629 - 2,414
12 Medium to Heavy Duty Industrial 2,443 - 4,722 2,357 - 4,557
Hotels (Including FF&E)
13 Three Star 4,795 - 5,842 4,627 - 5,637
14 Four Star 6,577 - 8,391 6,366 - 8,123
15 Five Star 8,187 - 9,847 7,958 - 9,571
Retails (Shell and core with public area finished)
16 District Mall 3,827 - 5,657 3,712 - 5,487
Carparking
17 Podium 1,833 - 2,371 1,742 - 2,252
18 Basement 2,103 - 2,594 1,998 - 2,465
• Professional fees, land acquisition costs and financing costs are excluded from the above.
• All hotel rates are inclusive of Furniture, Fittings and Equipment (FF&E).
• Costs/m2 are based on GIA as per the RICS code of measuring practice 6th edition.
• Cost ranges capture the average, based on all regions throughout Saudi Arabia.
NOVEMBER 2016
<<region>> Research & Forecast Report | Quarter Year or Date | <<Location / Sector>> | Colliers
International
Source of our benchmarkingColliers International’s internal database of projects
across Saudi Arabia form the basis of the Cost Models
required to build our benchmarking. A cost model
provides a consolidated construction cost image of a
proposed development type, however, each cost model
has to be normalized and index linked. For projects older
than 6 months in our database, we update via developing
a Construction Cost Index, to track the actual
movement of cost from the point in time the project was
tendered/awarded, up to date, which allows us to build an
accurate current range.
The Construction Cost Index tracks the historic
movement of;
Global construction commodity trends.
Movement in construction materials such as steel,
concrete, cement, blockwork, etc.
Shifts in manpower which include overheads,
supervision staff, skilled and unskilled labour.
Construction workload & competitiveness.
When predicting future construction costs, the same
methodology is used, however, instead of looking at
historical data, we study forecasted data.
“Benchmarking is an
essential tool to predict the
cost of construction at the
inception stage of
projects.”
Colliers International | KSA Construction Cost Benchmarking and Forecasting | Update - November 2016
Whilst the forecasted data is derived from local, regional
and international sources such as government
departments, the IMF, the World Bank, industry
stakeholders, etc., they are predictions based on current
information which require updating regularly.
(Source: Colliers International, November 2016, Construction Cost Index based
on average building type)
2016 Construction Cost Highlights
Rebar dropped 13%.
Concrete prices dropped by 3%.
Cement prices have remained stable.
Contractors profit & overhead pricing plummeted
throughout 2016, in some cases to negative margins.
Short Term Construction Cost Outlook
As global construction related commodity pricing
creeps up in 2017, this will affect the pricing of
copper, aluminum and steel.
Strong competition will continue due to extensive cuts
in capital expenditure, thereby forcing continued
downward pressure on contractors margins.
Subsidy cuts will be further passed onto increase
material costs, which are manufactured within the
GCC.
An increase of national workforce (1.6m to 1.8m over
the next 5 years) coupled with public sector targets to
reduce wages, will result in a requirement for
increased Saudization within the private construction
workforce.
Period Cost Index% of Change
(Year on Year)
2015 103.89 -3.1%
2016 92.26 -11.5%
2017 89.40 -3.9%
Our Project Management & Cost
Consultancy Services include:
Project Management
> Development Management
> Program Management
> Project Management
> Client Representation
> Construction Supervision
> Tenant Coordination
> Building Surveying
Quantity Surveying
> Cost Modelling & Benchmarking
> Cost Planning/Management/Control
> Risk Appraisal
> Life Cycle Costing
> Value Engineering
> Procurement Strategy & Advise
> Tendering & Evaluation
> Tender Documentation & Bills of Quantities
> Contract Documentation & Administration
> Cash Flow Forecasting
Project Monitoring
> Bank/Financial Institution Representation
> Early Warning Advice
> Project Cost Analysis and Advice
> Program Monitoring
> Stage Payment Recommendations
> Quality & Specification Inspections
Colliers International Construction
Consultancy
As specialist construction consultants we provide
project, cost and construction management services.
Our success is based on two simple principles;
i. Construction advisory that is tailored to each
client, based on the knowledge of our staff whom
first and foremost are construction people.
ii. Our services ensure risks are eliminated, quality
of design & construction is delivered, optimum
program timelines are achieved, all at the lowest
price possible.
Colliers International | KSA Construction Cost Benchmarking and Forecasting | Update - November 2016
Copyright © 2016 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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Colliers International
Director| Head of Project Management &
Cost Consultancy
Main: +971 4 453 7400
Mobile: +971 50 870 2107
Imad Damrah
Managing Director | Saudi Arabia
Main: +966 11 273 7775
Mobile: +966 50 417 2178
Colliers International | KSA Construction Cost Benchmarking and Forecasting | Update - November 2016