The first half of 2026 presented a challenge few anticipated at the start of the year.

Geopolitical tensions across the Middle East introduced fresh uncertainty into construction markets, placing greater pressure on supply chains, procurement strategies and project budgets.  Conversations that began around delivery and programme quickly shifted towards risk, cost certainty and the ability to maintain momentum in a changing environment.

Those trends were recently explored by ME Construction News, which covered the release of Compass Project Consulting's latest Construction Cost Benchmark Reports and the market conditions influencing project planning across Saudi Arabia and the UAE.

Read the ME Construction News article here.

While the article examines the wider market story, the benchmark reports themselves provide detailed construction cost data and sector-specific insights from across both markets.

Against that backdrop, one question becomes increasingly important:

What should a project realistically cost in today's market?

That question sits at the heart of Compass' latest H1 2026 Construction Cost Benchmark Reports for Saudi Arabia and the UAE.

What affected construction costs during H1 2026?

Geopolitical uncertainty influenced construction markets across the Middle East during the first half of the year.

Pressure was felt through material availability, specialist MEP equipment procurement, shipping routes, insurance costs and logistics.  For some projects, these factors introduced programme uncertainty and additional commercial considerations.

What's notable, however, is what didn't happen.

Despite the disruption, Compass has not seen evidence of a broad shift in overall construction benchmark rates across either market.  Instead, the impact has largely been absorbed at project level through procurement strategies, contingency allowances and more cautious commercial planning.

In practical terms, the market has become more careful rather than significantly more expensive.

Why is construction cost benchmarking important?

When markets are stable, benchmarking provides a useful reference point.

When markets are changing, it becomes an essential decision-making tool.

Current benchmark data helps organisations understand whether project budgets remain aligned with prevailing market conditions. It supports feasibility assessments, strengthens business cases and provides greater confidence before significant commitments are made.

As procurement conditions become more complex, reliable benchmarking can also help identify where assumptions may no longer reflect market reality.

What are we seeing across Saudi Arabia and the UAE?

One of the most notable findings from H1 2026 is the resilience of both construction markets.

In Saudi Arabia, Vision 2030 programmes continue to support project momentum across multiple sectors. Hospitality and mixed-use developments remain particularly active as preparations continue for Expo 2030 and the FIFA World Cup.

Across the UAE, large residential and infrastructure developments continue to advance, while owners and operators are taking a closer look at commercial performance, asset maintenance and future investment priorities.

What has changed is the level of scrutiny being applied to project budgets. Cost planning is becoming less about setting a budget and more about understanding the risks that sit behind it.

What do the H1 2026 Construction Cost Benchmark Reports cover?

Drawing on cost data from more than 1,000 commissions across the GCC, the reports provide benchmark cost ranges for construction and fit-out works across a wide range of asset classes.

Coverage includes residential developments, hospitality assets, mixed-use schemes, commercial offices, retail destinations, education facilities and entertainment projects.

Rather than focusing on individual developments, the reports provide a broad view of prevailing market costs, helping organisations assess opportunities against current market conditions and build greater certainty into project planning.

Construction markets will always respond to external events. What matters is understanding those movements early enough to make informed decisions.

The H1 2026 Construction Cost Benchmark Reports have been developed to provide that clarity.

Why haven't benchmark rates moved significantly?

Construction activity across both markets has remained strong, with many developments already underway or committed.

That level of activity appears to have helped absorb some of the pressure created by changing market conditions.  Rather than responding through widespread benchmark cost increases, contractors have generally priced uncertainty through additional risk allowances, longer procurement considerations and greater scrutiny of project assumptions.

Compass expects claims relating to programme impacts, prolongation and additional costs to become more common where disruption can be clearly demonstrated.  At this stage, however, those risks are better understood as project-specific considerations rather than a direct adjustment to benchmark construction costs.

As market conditions continue to evolve, Compass will monitor whether these pressures begin to influence tender pricing, realised project costs or agreed contractor claims in a more consistent way.

Download the Reports here.

For project-specific benchmarking, feasibility support or commercial advice, contact Compass' Cost & Commercial Management team via hello@compass-pc.com