Rise in commodity prices hits Saudi Arabia's construction sector-Colliers
While Saudi Arabia’s construction sector has slowly recovered in 2021 with growth forecast at 2.9 percent, the dramatic rise in commodity prices from the fourthquarter of 2020 poses some challenges to developers and contractors in assessing future projects and in dealing with long term contracts which were already awarded.
According to a new report from Colliers, over the 12 months between Q2 2020 – Q2 2021, the largest changes in the prices of building materials were in rebar, timber, wires & cables, which correlated with the upward trend of the commodity trade for aluminium, iron ore, copper and lumber over the same period.
The Colliers report said that while there was some normalisation of prices in Q2 2021, the mid to long term affect will be strongly influenced by how the pandemic is controlled globally and locally.
“We predict as the pandemic eases and the world economy reverts to some form of normality, there will be a downward correction of global commodities and in turn regional construction materials.”
