The construction industry in the UAE and Saudi Arabia is projected to experience significant cost increases following new trade tariffs announced by US President Donald Trump. According to the 2025 UAE & KSA Construction Cost Benchmarking Report from Stonehaven, the UAE is expected to face construction cost hikes of 2.7% to 3.3%, while Saudi Arabia will see increases ranging from 3.4% to 7%.

These cost estimates may be conservative as markets respond to global stock losses and supply chain disruptions that are likely to drive up prices for imported construction materials in the region. With over $2.3 trillion in active projects across both nations, the GCC region is especially vulnerable to fluctuations in international commodity pricing. The report emphasizes that key materials such as steel, concrete, and aluminum are expected to become more expensive in the next 18 to 24 months, with the hospitality, infrastructure, and residential sectors being the most affected.

According to Zawya, Gordon Rodger, Managing Director at Stonehaven, described the situation as a “stark wake-up call for the entire industry.” He noted that the sector is facing a “perfect storm” due to labor shortages, outdated processes, and increasing external pressures such as global trade tariffs. Rodger urged developers to act quickly to secure construction costs that align with their feasibility studies, warning that failure to do so could have serious repercussions for their financial performance.