The global construction industry is bracing for cost increases of up to 7% in 2025, with ongoing geopolitical uncertainty, economic instability, and a shortage of skilled labour driving price hikes, according to a new report by Currie & Brown.
Titled Building a Resilient Future: Adapting to Uncertainty in 2025, the report highlights the dual challenge facing the industry—strong demand for infrastructure, digital transformation, and renewable energy projects, offset by rising costs and supply chain pressures.
Middle East Growth Outpaces Global Challenges
Despite the global headwinds, the Middle East remains a bright spot, with government-led investment in infrastructure and large-scale transformative projects in Saudi Arabia and the UAE continuing to drive demand. However, this growth comes at a cost—construction prices in the UAE are expected to rise by 2-5%, while in Saudi Arabia, costs could climb between 5-7% in 2025, outpacing many global markets.
“The region continues to provide significant opportunities for construction,” said Doug McGillivray, Managing Director Southern Gulf at Currie & Brown. “However, clients should approach with caution. There are many uncertainties that could impact costs, delays, and feasibility. Robust risk management strategies and flexibility in project planning will be needed to build resilience for the long term.”
Key Cost Drivers in 2025
The report identifies several factors contributing to rising construction costs worldwide:
- Economic and Political Uncertainty – While inflation and interest rates are stabilising, protectionism, global conflicts, and political volatility are keeping markets unsettled. This instability continues to impact material and labour supply chains, increasing costs across most regions.
- The Digital Revolution – The rapid adoption of AI and digital infrastructure projects is driving competition for specialised materials. This is particularly evident in high-tech construction, where demand for specific components is pushing up costs.
- Labour Shortages – A chronic skills gap in construction is worsening, particularly in high-growth sectors such as renewable energy, digital infrastructure, and housing. The shortage is expected to drive up wages, further contributing to cost increases.
How Companies Can Adapt
According to Alan Manuel, Group CEO of Currie & Brown, resilience will be the key to success in 2025 as the industry navigates uncertainty. The report outlines three core strategies to help businesses mitigate cost hikes and capitalise on opportunities:
- Adopt a Flexible Approach – Diversifying supplier networks and contract structures can help businesses hedge against economic shocks and unpredictable market fluctuations.
- Tackle the Skills Gap – Companies should factor labour availability into project planning and invest in workforce training. Additionally, recruiting talent from adjacent industries—such as technology and healthcare—can help fill gaps.
- Leverage Data for Smarter Decisions – Granular cost analysis and stress-testing projects with real-time data can improve financial forecasting and adaptability in the face of unexpected disruptions.
Global Outlook: Where Will Costs Rise the Most?
Construction cost increases vary significantly by region. According to the report’s latest projections:
| Market | 2025 Cost Increase (%) |
|---|---|
| Saudi Arabia | 5 – 7% |
| UAE | 2 – 5% |
| India | 5 – 7% |
| USA | 4% |
| United Kingdom | 3 – 4% |
| Europe | 2 – 3% |
| China | 3 – 4% |
| Hong Kong | 0 – 1% |
| Japan | -0.5% (slight decrease) |
Building Resilience for 2025 and Beyond
While cost increases are inevitable, the report emphasises that organisations that prepare for uncertainty—through strategic planning, risk mitigation, and technology adoption—can better navigate the challenges ahead.
“Year-on-year cost inflation has become a fact of life for the global construction industry,” said Manuel. “But the real challenge is uncertainty. Companies that build resilience into their operations will be best placed to thrive in the long term.”
