ksa | benchmarking update november … project management & cost consultancy services include:...

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.”


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.


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.

$2.5billion inannual revenue

2billion square feetunder management

16,000professionals and staff

554 offices in

66 countries on

6 continentsUnited States: 153

Canada: 34

Latin America: 24

Asia Pacific: 231

EMEA: 112

Colliers International

Director| Head of Project Management &

Cost Consultancy

Main: +971 4 453 7400

Mobile: +971 50 870 2107

[email protected]

Imad Damrah

Managing Director | Saudi Arabia

Main: +966 11 273 7775

Mobile: +966 50 417 2178

[email protected]


ksa | benchmarking update november … project management & cost consultancy services include:...

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