Mena Construction Economic and Cost Insight

MENA Construction
Economic & Cost Insights

Research | 2022
JLL | MENA Construction Economic & Cost Insights

Table of contents
Introduction
01
Overview
Economics
Projects
Commodities
Material Spotlight: Steel
02
Region Visions
Egypt
Saudi Arabia
United Arab Emirates
03
Middle East Construction Trends
The Race to Net-Zero
04
Construction Cost Information
Case Study: High Rise Residential
Cost of Construction
Tender Price Inflation
JLL | MENA Construction Economic & Cost Insights JLL | MENA Construction Economic & Cost Insights
Introduction
2021 saw a revival of business activity in The annual average price of oil per barrel in 2021
the MENA region following the successful reached $70 per barrel; a 68% increase from
COVID-19 vaccination programmes. Haver $42 per barrel in 2020. The Egypt, KSA and UAE
Analytics has forecast a resurgence in GDP announcements of their planned 2022 government
growth for Egypt, Saudi Arabia and the United spending are expected to be a catalyst for growth
Arab Emirates for 2022. in the region. Market sentiment should improve
as commodity prices stabilize over the course of
Welcome to JLL’s MENA Construction Economics 2022.
and Cost Insights 2022.
We have observed new trends over the past two
Construction activity maintained its momentum years with a shift in societal behaviours, which
throughout 2021, with a strong finish to the year could lead to future development opportunities.
as $156 billion worth of projects were awarded We believe that the pandemic has prompted a
over 2021 across the MENA region. The recent change in mindset and we envisage clients and
‘race to Net-Zero’ commitments should generate a developers alike to look for a change in their
positive project market, as clients and developers project processes, turning to new or revived
in Egypt, KSA and the UAE focus on the Vision strategies to promote project success.
programmes. We anticipate enhancements to
the construction sector as digital transformation We will monitor the announced visions and
continues its growth within the region. associated projects across Egypt, Saudi Arabia and
the United Arab Emirates throughout 2022 as they
contribute to a rebounding economy following the
uncertainty associated with the ongoing COVID-19
pandemic.
$70 per BBL $156B

2021 (avg) 2021 total MENA
oil Price project awards
+ $28B from 2020
(Source: OPEC) (Source: Meed Projects)
2050 2060
UAE Net-Zero Carbon KSA Net-Zero Carbon
Commitment Commitment
JLL | MENA Construction Economic & Cost Insights The following data presented within this report tracks
JLLup| MENA
until 31st December 2021.
Construction Economic & Cost Insights
01 Overview
Economics
Projects
Commodities
Economics
Egypt – Saudi Arabia – United Arab Emirates efficiency and generating employment. The The Purchasing Managers Index measures the performance of the non-oil private sector. Above
budget will further support the Kingdom’s Vision 50 represents an expansion in the non-oil private sector, below 50 represents a contraction and 50
The COVID-19 pandemic caused disruptions 2030 programme with the initiatives inspiring represents the base line.
to global economic activity. The successful a more diverse economy. KSA’s PMI reached a
rollout of vaccination programmes in the MENA rebound of 58.6 in September, which fell to 53.9 in
region ensured disruptions were temporary as December. Emirates NBD states that the decline is Purchasing Managers Index (PMI)
activity levels have returned to a new norm. The attributed to a slower rate of expansion measured
continuation of business and leisure activities across the PMI indexes. Haver Analytics forecast
to pre-pandemic levels will encourage economic KSA’s GDP growth at 2.4% for 2021 and 4.6% for
growth within the region. The effect of the 2022.
COVID-19 Omicron variant and potential future
outbreaks place an element of uncertainty on The UAE government announced their 2022 federal
global economies, which may impact market budget of AED58.9 billion, with 41% allocated to
sentiment and economic outlook at the onset the development and social benefits sector. This
of 2022. forms part of the UAE’s General Budget for 2022-
2026 with a total of AED290 billion expenditures -
Egypt’s headline PMI increased to 49.0 in the largest spending budget in UAE’s history. Haver
December in the 13th consecutive month sub-50 Analytics forecast UAE GDP growth at 1.5%for 2021
reading. Emirates NBD reports that continuing and 6.3% for 2022. The UAE’s PMI for November
supply chain disruptions and rising prices have reached 55.9 - the highest reading since June 2019.
impacted the recovery of developed and emerging According to Emirates NBD this is representative
markets. According to IHS Markit, a revival of of a strong performance for the non-oil sector,
the tourism industry throughout 2022 should positive economic activity led from Expo 2020
encourage a favourable result to Egypt’s current and domestic demand. The UAE’s GDP growth is
account. Haver Analytics forecast a positive expecting stronger growth in Q4 2021 benefitting
rebound of GDP growth at 5.7% for 2021 and 4% from easing travel restrictions supporting tourism
for 2022. and hospitality sectors. Hotel occupancy reached
80.7% in October, while Dubai International
The Ministry of Finance for KSA announced a Airport welcomed 20.7 million passengers between
Source: IHS Markit
planned expenditure of SAR 955 billion for 2022, January to October 2021. Dubai Airports expects
promoting economic growth, improving spending 57 million passengers in 2022.
GDP 2021/2022
Egypt KSA UAE

5.7% 2.4% 1.5%
4% 4.6% 6.3%
Source: Central Bank of Egypt/Haver Analytics, General Authority for Statistics/Haver Analytics, Ministry
of Economy/Haver Analytics. 2021/2022 forecast.
Construction Project Awards Egypt 2021 Construction Project Awards (USD $ millions)
Projects Residential $4,338M
Mixed-use $1,074M
Following volatile global markets throughout Infrastructure recorded a strong performance of
2020, 2021 was expected to be a year of project awards across MENA during 2021 with
economic recovery. Construction activity is Egypt awarding $6.9 billion, $3 billion in KSA and *Other $648M
a key market indicator for economic revival, $973 million in the UAE. Within the construction
MEED Projects recorded a rebound to the project awards, the residential sector was
overall MENA project awards value in 2021 of consistently the busiest market across Egypt, KSA Hospitality $493M
$156 billion. KSA represents the highest value of and UAE. The highest performing construction
awarded projects for 2021 with a recorded $41.3 sectors in terms of total value awarded are
Commercial $221M
billion. A remarkable result considering ongoing identified in the graphs on the following page,
challenges driven by the pandemic. respectively.
The Overall Projects Award value presents the total awards value of projects under execution as of 2020
and 2021. With an overall total for MENA and a summary of Egypt, Saudi Arabia and United Arab Emirates. KSA 2021 Construction Project Awards (USD $ millions)
Project Award Analysis
2021/2022 Residential $3,424M
Other $2,439M
*2021
US$ 34B Leisure $1,279M
Hospitality $1,221M
Public $857M
*2021
US$ 9.2B
*2021 *2021 UAE 2021 Construction Project Awards (USD $ millions)
US$ 6.8B US$ 8.3B
Residential $4,549M
Mixed-use $1,203M
Other $1,088M
Cultural $1,036M
Source MEED Projects
* Construction Project Asset Award 2021 Value
Hospitality $375M
JLL | MENA Construction Economic & Cost Insights Source: MEED Projects JLL | MENA Construction Economic & Cost Insights
* Other unless already stated includes: commercial, education, healthcare, leisure, public, retail, telecom.
Commodities
Oil pre-pandemic levels by H2 2022. While the oil Metals
price is susceptible to many economic factors,
The OPEC price averaged $70 per barrel citing a it is hopeful that vaccination rates should offset Throughout 2020 and 2021 metal prices were susceptible to volatile changes within the market triggering
recovery of $28 per barrel compared to the 2020 future economic uncertainty stemmed from the prominent price increases. This was closely linked to global demand and logistic constraints caused by
average, supported by improved demand. The risk of the recent Omicron variant and future the pandemic. Global manufacturing, supply chains and shipping were disrupted due to lockdowns and
OPEC Reference Basket (ORB) increased to $82 outbreaks. Although it is too soon to tell how reduced labour. Increasing transportation costs from higher fuel prices also impacted material costs in the
per barrel in October, as global business activity this will impact social and business behaviours region.
resuming to a new post-pandemic norm. Total including aversions to travel. Notwithstanding the
world oil demand is forecast to reach 100 mb/d in threat of the new variant, Emirates NBD reports As global economic activity resumes to a new normal, The World Bank forecast metal commodity prices
2022 of which OPEC crude is anticipated to equate that major economies are not expected to enter are set to fall by 5% in 2022. This should offer reassurance of stabilizing future increments. Demand trends
to 28.7 mb/d of the total. According to OPEC as oil lockdowns like those witnessed across 2020 / derived from economic shifts and linked to increasing urbanization and development prospects will also
demand continues its recovery it is expected to 2021, supporting the continuation of rebounding factor in future prices balanced against overall supply. In 2021 the average price of copper increased 51%
reach . business and economic activity into 2022. compared against 2020. Aluminum increased by 45% and Iron Ore by 48%.
The commodity prices and economic forecast are tracked up to 31st December 2021. However, we
note that during Q1 2022 the oil price reached a 14 year high, increasing by circa 60% since the start
of 2022. We will continue to monitor the rising oil price and the impact on manufacturing and freight
costs, relative to the construction industry this could effect ongoing material prices increases already
catalyzed from the Covid19 pandemic.
OPEC Oil Price
World Bank Metal Commodities
Copper Aluminium Iron Ore
October October December *March Metal Prices

2020 ORB 2021 ORB 2021 ORB 2022 ORB 2020 / 2021
+51% +45% +48%
$41 $82 $74 $ 126

per BBL per BBL
Copper Aluminum Iron Ore
per BBL per BBL
2021 avg. 2021 avg. 2021 avg.
$9,317t $2,473t $162t
*Current oil price at the time of report release Metal prices taken from January – December 2020 / 2021. Based on metric tons (Iron Ore based on dry metric ton)
Steel The construction industry is a key sector for
the use of steel and despite global challenges
The World Steel Association recognizes that the during the pandemic, many regions-maintained 2021 Steel Rebar Movement (annual average against 2020)
pandemic has driven new key trends which will development momentum. Locally, the increase in
encourage a shift in steel demand. According to the oil price throughout 2021 and into 2022 should
The World Steel Association there is enthusiasm support increasing steel demand across the GCC
around future developments which will be driven and MENA region. The infrastructure sector is a
by a growing digitization trend, automation, prominent factor in the use of steel. It is also a
energy transformation, infrastructure initiatives mechanism, in parallel with green initiatives used
and general urbanization. Steel demand growth by Governments to support construction industry
is forecast to grow by 4.5% in 2021 and a further recovery. Available investment opportunities will
2.2% in 2022. be balanced against the Government’s financial +46% +23% +46%
stance and capacity for such investments.
Egypt KSA UAE

Steel - Rebar and the UAE by 46%. Following The World Bank’s
Generally, the steel rebar year-on-year price

estimation of metal prices falling 5% in 2022 we
believe this may have a consequential effect on
$915 $730 $670
increased substantially as we tracked the price the Rebar price within the construction industry.
change throughout 2021, albeit, we have noted Which will be balanced against local industry
contractions across some months. The average constraints, market sentiment, manufacturing
price during 2021 compared to 2020 for rebar in supply and supply chain disruption improvements.
Egypt increased by 46%, KSA increased by 23% per tonne
Steel Rebar Prices
Source: UAE & KSA – MESteel, Egypt – Ministry of Housing
Region visions
During Q4 2021, Riyadh hosted the fifth global development plans aligned with individual
Future Investment Initiative, where its participants country’s visions. The opportunity will focus on
included influential business and government the balance between continuing construction
leaders. Discussions from the event focused on development, reducing the region’s energy
the circular carbon economy, green technologies, footprint, and adapting carbon capture, utilization
sustainable tourism, environmental and social and storage (CCUS).
governance (ESG), investing in equality and
digitization. Both KSA and the UAE have pledged to We anticipate a positive continuation of the
decarbonize and commit to Net-Zero carbon. The construction projects market as visionary
UAE has committed to the year 2050 while KSA has developments progress in 2022. Supported by
committed to 2060. Green hydrogen has recently the oil price recovery during 2021 and successful
been cited as the Middle East’s next ‘black gold’. vaccination drive allowing the continuation of
We are anticipating that this will be a significant economic and social activities. MEED Projects
tool for decarbonization. The International Energy tracked the 2021 total construction project awards
Agency reported that due to global lockdowns value for Egypt as US$6.8 billion, KSA US$9.2
causing reduced economic activity, CO2 emissions billion and the UAE US$8.3 billion.
fell by 5.7% by year-end 2020. This equates to
2,000 million tonnes or is comparable to the We also expect to see advancements to the
European Union’s total annual emissions. Global application of digital technologies across the
emissions are expected to have increased once MENA construction industry as the technology
again during 2020 as economic activity recovered industry continues its growth within the region.
following enforced lockdowns. The decarbonization of projects will be systematic
to the reliance and increased use of digital
A focal point for the Net-Zero commitment is technology in the future. There are exemplary
creating a better world, which relates to the 17 cases of the adoption of digital technology in
Global Goals (Sustainable Development Goals construction processes within Saudi Arabia and
/ SDGs) agreed by world leaders in 2015 and as the United Arab Emirates. The proven benefits to
02 Region
presently showcased at Dubai Expo2020. The efficiency and cost management are expected to
goals are a significant factor in future drive this further.
Visions
Egypt
Saudi Arabia
Egypt
ESG considerations are a high priority for real addressing the housing gap and rapidly growing
estate investments which will be at the forefront of population. In addition, a number of visionary
future development plans within the MENA region. and high-profile Green Projects are contributing
to a growing projects market. The world’s largest
In 2016 Egypt announced their Sustainable green hydrogen project is planned for completion
Development Strategy, Vision 2030, aiming prior to Egypt hosting COP27 in 2022. The project
to achieve sustainable development for a will be designed to produce 90,000 tonnes of green
better standard of living with a dependence on ammonia. Additionally, for the renewables sector,
science, knowledge and innovation. According a 500MW wind farm was announced in 2021,
to Sustainable Development UN, the residential further contributing to Egypt’s sustainable
sector is expected to continue to develop energy development.
with additional funding provided for the
redevelopment of impoverished communities,
Vision 2030
Egypt
Is a national agenda launched in 2016,
consisting of the country’s long-term
strategic plan to achieve the principles
and goals of comprehensive sustainable
development.
The three dimensions of sustainable

development being: Economic, social and
environmental dimensions.
Egypt Vision 2030 focuses on improving the

quality of life of the Egyptian citizen and
improving the standard
in various aspects of life.
Saudi Arabia
KSA is working towards their established Vision facilities. The planned projects across the
2030 programme, supported by the continuation Kingdom highlight the effort towards economic,
of the Kingdom’s associated gigaprojects. NEOM, social and cultural diversification, aligned with the
The Red Sea Project, and AMAALA provide new 2022 budget announcement with an investment
opportunities to own property on the West focus on the education, healthcare and social
Coast. In parallel, creating jobs in construction development sectors. In Q4 2021, KSA was one
and development, employment opportunities of five countries to submit their bid to host EXPO
within the hospitality sector and investment 2030 in the capital city, Riyadh. The proposed
in infrastructure and renewable energy. Vision theme is ‘’The era of change: Leading the planet to
2030 aims to create a better quality of life a foresighted tomorrow’’. This further contributes
alongside a diversified economy that emphasises to the success of the objectives behind the Vision
sustainability, education and hydrocarbon 2030 programme.
Vision 2030
Kingdom
of Saudi Arabia
Using its investment power to create a more
diverse and sustainable economy, and its strategic
location to build its role as an integral driver of
international trade to connect three continents:
Africa, Asia and Europe.
Visionary Projects
1 2
Al Ula King Salman Energy Park (SPARK)
This unique destination encompasses more The project will help to encourage clean
than 200,000 years of unexplored history, and sustainable energy production as a
is to become a living museum and global fully integrated industrial ecosystem. SPARK
destination for history, heritage, cultural covers an area of 50 sq km, developed to be
and ecotourism. the leading gateway for the region’s energy
sector.
3 4
The Red Sea AMAALA
The luxury destination is created over 28,000 A global wellness ultra-luxury destination,
sq km of pristine islands and waters, creating wellness, arts, culture and purity of the Red
a unique travel experience with sustainability Sea are the inspiration behind the project.
at its core with renewable energy, water Owned by the Public Investment Fund, the
conservation and re-use. This ‘gigaproject’ project will establish new standards in luxury
will comprise of hotels, residential properties, and wellness. Boasting 3,000 hotel rooms
leisure facilities and entertainment venues. across 25 hotels, private residential villas,
apartments and estate homes.
7
5 6
Diriyah Gate King Salman Park
2
1 Saudi Arabia’s cultural capital. Diriyah is being The park is over 16 sq km, providing a hub to
transformed to promote Arab and national imagine, innovate and create a new world of
5
4 heritage, offering educational, and cultural possibilities. A destination which is accessible
9 opportunities. The historical city will become to all adding colour to life, with arts, culture,
3 6 a gathering place providing entertainment, sport and entertainment surrounded by
8 shopping and hospitality experiences. nature. The development will provide the
‘’green lungs’’ of Riyadh city.
7 8
NEOM Qiddiya
This ‘dream of the future project’ is situated This project is based on five thematic
on the Red Sea and Gulf of Aqaba in North cornerstones; Parks & Attractions, Sports &
West Saudi Arabia. Cited as a destination Wellness, Motion & Mobility, Arts & Culture
and home for people who dream big and and Nature & Environment. In line with
want to be part of building a new model Vision 2030 to enhance the Kingdom’s
for sustainable and prosperous living. The entertainment, culture and tourism offerings.
project will be powered 100% by renewable It will become a destination that offers
technology. innovative, immersive and unparalleled
experiences.
9
ROSHN
Currently spans across six communities within the Kingdom and focuses on contributing
towards the demand of home ownership across Saudi Arabia, while improving the quality
of life for citizens.
According to Climate Action Tracker in Q4 2021 future visions. The UAE have implemented future UAE National Food Strategy 2051 UAE Energy Strategy 2050 Dubai Urban Master Plan 2040
the UAE were the first Middle Eastern country to visions and strategies continuing the country’s
announce their 2050 Net-Zero emissions target, development ambitions. The UAE’s Projects of the Make the UAE the worlds best “in Increase the contribution of clean Sustainable urban development
exemplifying the expansion of carbon capture 50 intend to foster the new phase of growth with Global Food Security’’ index by 2051. energy in the total energy mix from in Dubai. Aligned with Dubai’s
(CCUS) and investment in renewable energy projects supporting the country as a global nation 25% - 50% by 2050. Invest AED 600B strategic economic priorities
and nuclear power. In the shorter term they and testbed for technologies and innovation. The 2021 score: 35 by 2050 to meet growing energy and needs of the future.
announced the hydrogen leadership roadmap UAE Energy Strategy 2050 will generate significant demand, ensuring sustainable
which is targeting a 25% global market share of projects as the country endeavours to target an growth for the country’s economy. Land area for hotels and tourist
low-carbon hydrogen by 2030. In turn contributing energy mix combining renewable, nuclear and activities to be increased by 134%.
to the Net-Zero 2050 target. The UAE is currently clean energy sources. Meeting the UAE’s economic
hosting EXPO2020 ‘connecting minds and creating requirements with a significant investment. While
the future’. A sustainability factor of the exhibition Abu Dhabi Economic Vision 2030 and the Dubai
is 80% of the EXPO buildings will be regenerated Urban Master Plan 2040 are providing investment
for a mixed-use legacy project ‘District 2020’. A and economic growth opportunities fostering
representation of the commitment the UAE are reduced reliance outside of the oil sector.
striving towards paralleled with the Emirates
Vision 2030
United Arab
Emirates
Abu Dhabi Economic Vision 2030 RAK Energy Efficiency & Operation 300B, the UAE’s
Renewable Energy Strategy 2040 Industrial Strategy
Transformation of the Emirate’s
economy including reduced The Emirates contribution to the Operation 300B aims to
reliance on the oil sector, with UAE’s commitments towards raise the industrial sector’s
a focus on knowledge-based climate change. contribution to the GDP from
industries. AED 133B to AED 300B by 2031.
Programmes include:
Establish a resilient monetary and • Green Building Regulations Aligned to advancing
financial market environment with • Energy from Waste sustainable economic growth,
manageable levels of inflation. • Energy Management deploying clean energy
• Water Reuse & Efficient Irrigation solutions and promoting
Develope a sufficient and responsible consumption
resilient infrastructure capable of Target: and production.
supporting anticipated economic • At least 30% savings in electricity
growth. consumption
• 20% savings in water consumption
• 20% contribution from renewable
energy in the supply mix
03 MENA
Construction
Trends
The Race for Net-Zero MENA
The Race for Net-Zero
Why net-zero?
In order to stabilize climate change, CO2 emissions This is likely to get even worse, because unless
NEED to fall to zero, which is why the world needs emissions are rapidly reduced, temperatures could
to become Net-Zero. rise 1.5°C by 2040, 2°C by 2065 and 4°C by 2100 –
which would lead to disastrous climate impacts.
The longer it takes to do so, the more the All of this could have catastrophic effects on life
climate will change, which is why - in “the Paris on our planet, which could be especially worse
Agreement”, governments agreed to keep global in the Middle East and North Africa. This part of
warming to a maximum of 1.5ºC above pre- the world is likely to warm faster than the global
industrial levels. average. If global temperatures rise by 2°C,
o
summer temperatures in this region could more
+3 C
if temperature rises by
Limiting global temperature rise to 1.5°C above than double. By 2050, daytime temperatures could
pre-industrial levels is extremely crucial as it is rise to 46°C (MENA average) on the hottest days.
the only way to hold off some of the worst climate Temperatures of +40°C can be deadly, and this 10 months average
impacts and avoid irreversible damage to our could make parts of the region uninhabitable & length of drought
societies, economies and the natural world. rising temperatures are also likely to lead to water
This may not seem like a big deal, but climate shortages.
change has already caused global temperatures to
rise about 1°C above pre-industrial levels, and as a At this point, it is very unlikely that the world
result, the world is already experiencing the effects can avoid the impacts of climate change. But the
of a 1°C temperature rise. In 2015, for example, a least it can do is to try to reduce the effects to
o
+2 C
heatwave in Karachi, Pakistan, killed 1300 people. a minimum by limiting global warming to 1.5°C
because a 1.5°C world is much better than a 2°C
or a 3°C world.
4 months average
length of drought
The different futures

that lie ahead. +1.5 C
o
Source: United Nations Climate Change

2 months average
length of drought
Net-zero targets by country In Law
In order to achieve these net-zero goals, several countries have set policies and laws to reduce carbon UK: Net Zero by 2050
emissions by the year 2050. Below is a comparative target illustration in the race for a net-zero for the
following counties. 2050 is the UK deadline for
delivering Net-Zero. UK was
the first major economy in
the world to pass laws to
end its contribution to global
warming by 2050.
In Policy
Document
Turkey: Net Zero by 2053
Proposed / In
Discussion
Lebanon: Net Zero by 2050 Proposed / In
Discussion
Sudan: Net Zero by 2050
Declaration /
Pledge
Bahrain: Net Zero by 2060
In Policy Declaration / Declaration /

Document Pledge Pledge
US: Net Zero by 2050 KSA: Net Zero by 2060 UAE: Net Zero by 2050
A wide-ranging climate On Oct 23, 2021, just days ahead In Oct 2021, the UAE
bill was passed by the US of COP26, the world’s biggest oil pledged to reduce its
House of Representatives exporter (Saudi Arabia) pledged to cut carbon emissions to net-
in March 2021, that, its carbon emissions to net zero by zero by the year 2050 and
established the country’s 2060, amid growing pressure to show became historically, the
commitment to get to solidarity with climate action. They first gulf country to do so.
net-zero by 2050. The US have ambitious decarbonization plans As a result, all buildings in
intends to plough a good with the ‘Saudi and Middle East Green the UAE must be net zero
proportion of its post- initiatives’, which aim to meet the net- carbon by 2050. This would
pandemic infrastructure zero goal through implementing energy have a profound impact
spending into green efficiency programs, carbon-capture as the UAE has some of
finance. technology, renewables and planting the highest electricity
billions of trees. demands per capita.
What is a Net-Zero
Carbon building?
As part of the Net-Zero commitment from the Net-Zero Carbon commitments. Future changes
Middle East specifically KSA and the UAE, a will be seen throughout the design, planning,
significant aspect will be the construction of supply chain, construction and operation of each
new buildings and assets. Future development individual building – existing and new.
of assets will be transformed in order to meet
A Net-Zero Carbon building is simply a building that has no net carbon emissions during its
construction and operation. Carbon emissions are reduced to a minimum and whatever is leftover
is balanced by renewable energy or by purchasing carbon offsets.
Carbon emissions from building Carbon emissions avoided from use of

construction and operation renewables and carbon offsets
Net-Zero Building
“A Net-Zero Energy Building is a very highly energy

performing building with renewable energy generation
covering all its annual needs.
”
Source: Emirates GBC: Defining Nearly Zero Energy Buildings
Roadmap to Net-zero
Buildings
1 Reducing Embodied Carbon 2 Reducing Operational Carbon 3 Onsite Renewables – Self-generated 4 Off-site Renewables - Purchased
Use Less
Passive Design Measures Once a building’s operational carbon emissions When on-site renewable energy sources are not
• Existing structure & fabric –
• Minimize glazing to wall ratio are reduced to a minimum. On-site renewables sufficient to meet the building’s energy demand –
Building refurbishment
• Light shelves to increase natural daylighting energy sources must be used to meet as much Offsite energy sources would be looked at to meet
• Existing foundations
• Efficient Glazing – Double/Triple Low-E glazing of the building energy demand as possible. the residual energy demand, so that the building
• Avoid new basements
• Airtight building envelope to reduce Infiltration would have zero operational carbon emissions.
• Efficient design
• Low-U value Building envelope – These can include:
• Offsite manufacturing
External wall & Roof Insulation • Photovoltaics (Rooftop PV, BIPV façade, These include acquiring (power purchase
• Design for extended lifecycle
• External Shading – Overhangs for south, PV glazing) agreements) & purchasing electricity from offsite
• Design for disassembly
Louvers/Mashrabiya for east/west • Solar thermal collectors for hot water renewables:
• Design for re-use and recycle
• Openable Windows for natural ventilation in • Wind turbines – rooftop micro-wind turbines • Solar farms
cooler months • Direct geothermal • Concentrated Solar Power (CSP) plants
Use Alternatives
• Bio-fuel • Winds farms
• Recycled materials – (e.g replacing OPC
Active Measures • Fuel cells • Hydropower plants
concrete with fly-ash based geopolymer
• LED Lighting • Green Hydrogen plants
concrete)
• Lighting controls – Occupancy sensors,
• Minimally processed materials - (Timber)
Daylight sensors
• Lower carbon/natural materials
• Efficient HVAC systems – High COP, energy
• Locally sourced materials
recovery, variable speed drives etc.
• Intelligent Procurement
Replacing Regional passive Energy modeling

Recycled cement with fly- and active using regional
steel ash produces design and climatic
a low-carbon construction conditions and
concrete materials Utilization of alternative renewable energy sources feasible in the region.
Material
Reused doors Environmental System
and windows Product optimization
Declarations
(EPDs)
Operational vs Embodied
Common definitions for Net Zero buildings only account for carbon emissions from energy usage
in the operational stage (operational carbon emissions).
However, In order to ensure buildings are truly net zero and release zero carbon emissions over its
whole lifecycle - we must also remove carbon emissions associated with constructing and maintaing
buildings; (embodied carbon emissions). This is because embodied carbon makes a significant
contribution – between 30% and 70% of a typical building’s total lifecycle emissions.
CO2 CO2
GHG Emission GHG Emission
Embodied Embodied
Operating
Time
Extract raw Transport to Manufacture Transport Construct the Use and maintain Demolish the Haul away waste Landfill
materials factory products to site building the building building materials (or recycle)
Embodied Carbon of Buildings Source: Buildpass (UK)
What if we still can’t How the supply chain is
get to Net-Zero? adapting to decarbonization
Once embodied carbon emissions are reduced • When purchasing offsets, it is recommended The World Green Building Council states organizations in the building sector. We believe the
to a minimum, and there is no way of reducing that carbon offsets must be first procured from that as of June 2021, there are only 804 net- supply chain must adapt to remain relevant in a net
it to zero emissions - carbon reduction/offset renewable energy projects and then, if needed, zero certified buildings around the globe. zero building sector. With wide ranging initiatives
credits can be purchased to offset the remaining non-renewable energy projects. As a result, to reach net zero targets by 2050 required to enable organizations to meet these
embodied carbon emissions from the building requires monumental and coordinated effort by targets and processes explained in
to get it to net-zero carbon status. This is • The Carbon Offset credits must be bought from businesses, governments and non-governmental the diagram below.
because, most times, use of sustainable building carbon offset/sequestration projects which
construction practices are not enough to reduce meet the ‘Gold Standard’ or the ‘Verified Carbon CO2
a building’s embodied carbon emissions to zero. Standard’ (VCS).
Create transparency Optimise for CO2
By purchasing carbon offsets, you invest in a • The Offsets must also be procured from the same
climate project, that reduces or avoids carbon region as the asset is based in as much as possible 1. Build value chain emissions baseline 3. Redesign products for sustainability
emissions produced elsewhere. Examples of to reduce adverse emissions. and exchange data with suppliers 4. Design value chain/sourcing strategy
these types of projects include; afforestation 2. Set ambitious reduction target on for sustainability
(planting new trees), production of renewable Scopes 1-3 and publicly report progress
energies (solar/wind farms etc.)
5 Carbon offset credits

Engage suppliers Push ecosystems
5. Integrate emissions metrics in 7. Engage in section initiatives for best

procurement standards and track practices, certification, advocacy
1. Building can’t get its 2. Building owner purchases
performance 8. Scale-up “buying groups” to amplify
embodied carbon emissions carbon offset credits equivalent
6. Work with suppliers to address demand-side commitments
to zero in order to become a to offset its remaining CO2
their emissions
Net-Zero building emissions.
Removal of 1 Tonne of CO2
emissions = 1 Carbon offset
credit Enable your organization
9. Introduce a low-carbon governance to

align internal incentives and empower
your organization
CO2
4. Carbon offset certificate is 3. Investment in Carbon offset
provided to certify that the building, funds renewable energy and
offset the remainder of its emissions forest projects that absorb C02
through carbon offset projects. from the atmosphere.
The building’s embodied C02
emissions are now certified Net-Zero
Supply Chain Adapting to Decarbonisation
JLL | MENA Construction Economic & Cost Insights Carbon Offset Credits For Buildings Source: The World Economic Forum JLL | MENA Construction Economic & Cost Insights
Benefits of Net-Zero
Buildings
Investment in net-zero carbon buildings protect 4. Offices could have greater profit margins from
against the effects of climate change and offer Improved employee productivity due to healthy
benefits beyond carbon reduction. Benefits of indoor environments in Net-Zero offices:
Net-Zero carbon buildings include: Studies show improving the indoor environment
of the workplace could result in improved
Environmental Benefits productivity and reduce sick leave, leading to
greater profit margins for businesses. This is
1. Helps combat Climate Change ( & meets supported by a high-quality indoor environment
CSR objectives) – Building produces zero CO2 such as improved air, water, acoustic, daylight and
emissions, which helps organization contribute access. By enabling access to cleaner fresh air and
towards reducing impacts of global warming water, and access to natural daylight (vitamin D
& meet corporate social responsibility (CSR) and circadian lighting patterns) lead to improved
objectives sleep quality. This can ultimately achieve a higher
functional capacity and better mood. These
Financial Benefits factors are known to improve occupants physical
and mental wellbeing and therefore improve their
2. Zero running costs/utility bills – Operational productivity.
energy demand is met by renewables & no
electricity needs to be purchased from the grid. 5. Opportunity for Green Funding – Banks (HSBC,
Standard Chartered) and Investment firms (Dubai
3. Greater Asset Value - Higher rents and Green Fund) provide investments to help the
occupancy rates due to increased customer building sector advance towards its Net-Zero goal.
attraction to green building projects.
04 Construction
Cost
Information
Cost of Construction
Case Study: High Rise Residential Tower
Tender Price Inflation
Egypt cost of construction Definitions
Low EGP/ High EGP/ Basis & Assumptions
m2 m2 • The m2 area is based on GIA
• The benchmark rates included are a range of indicative Egypt construction costs based on JLL project
data. Factors such as project location, contract type, contractor, building design e.g. façade type,
Apartments (Fully Finished) 12,500 19,000 specification level, economies of scale, building efficiency and structural solution can impact the cost.
Residential High Rise 16,000 20,000 • Low range: assumption is based on low-medium specification and verified against JLL benchmark
Villas (Fully Finished) 13,000 18,000 projects.
• High range: assumption is based on medium - high specification and verified against JLL benchmark

projects.
Retail Strip Retail* 10,000 13,000

Retail Mall* 23,000 32,000
General Exclusions

Capital contributions to third Marketing cost & expense Utilities outside the plot
Commercial Low - Mid Rise (S&C) 14,000 23,000 parties, tenants or authorities boundary
Office Low - Mid Rise (Fit Out) 14,000 21,000 Land cost
Client finance costs Developer legal fees
Municipality connection cost
Local authority charges, road TV and AV system
Master infrastructure cost
closures, etc.
Inflation
Car Basement 8,000 13,000 Grey & rain water recycling system
Client insurances
Parking Above Grade 4,500 9,000 Professional fees
Waste management
Taxes except for construction VAT
Contingencies
Facility management equipment
Development management cost
& expense
Public Landscape (rate / GLA) 700 1,200
Amenities Infrastructure (rate / GLA) 700 1,200
Mosque 35,500 45,000
Retail Notes
Excludes tenant fit out.
Hotels Low High
Residential / Commercial Notes
5 Resort EGP cost / key 3,100,000 3,400,000 Excludes loose furniture, white goods, OS&E, artwork, internal planting, active IT equipment and leasing
EGP cost / m2 35,000 40,000 & acquisition costs.
Hospitality Notes
EGP cost / key 2,500,000 3,000,000 Excludes loose furniture, white goods, OS&E, artwork and internal planting.
4 Hotel EGP cost / m2 30,000 35,000
Carparking Notes
The benchmark rates are based on 35-40m2 average parking space per bay.
Landscaping Notes
The benchmark data is a blended rate which includes hard, softscape, furniture, lighting, associated
mechanical & electrical services, special features and earth works. Factors such as, volume and density,
specification level and features will impact the complete EGP/m2 cost.
*C&S except for common areas
KSA cost of construction Definitions
Low SAR/ Mid SAR/ High SAR/ Basis & Assumptions
m2 m2 m2 • The m2 area is based on GIA.
• The benchmark rates included are a range of indicative KSA construction costs based on JLL project
specification level, economies of scale, building efficiency and structural solution can impact the cost.
Residential High Rise 5,300 6,900 8,500 • Low range: assumption is based on low-medium specification and verified against JLL benchmark
Villas 4,500 5,250 6,000 projects.
• Mid range: mid range rates: are based upon the midpoint of the low - high rates.

projects.
• The rates are based on traditional design and construct (Employer and Contractor), i.e. not developer
Retail Strip Retail 3,000 3,750 4,500 managed.
Community/Regional 4,800 5,650 6,500
General Exclusions

Commercial Low - Mid Rise (S&C) 4,000 4,875 5,750 Capital contributions to third Marketing cost & expense Utilities outside the plot
Office Low - Mid Rise (Fit Out) 3,600 5,700 8,300 parties, tenants or authorities boundary
Land cost
Municipality connection cost
Local authority charges, road TV and AV system
Master infrastructure cost
Car Basement 2,950 3,350 3,750 closures, etc.
Inflation
Parking Above Grade 2,250 2,750 3,250 Grey & rain water recycling system
Client insurances
Professional fees
Waste management
Value Added Tax (VAT) & other taxes
Contingencies
Facility management equipment
Public Public Parks & Landscape 350 675 1,000 & expense
Amenities Local Mosque 4,500 5,750 7,000
Retail Notes
Hotels Low Average High Residential / Commercial Office Notes

Excludes loose furniture, white goods, OS&E, artwork, internal planting, active IT equipment and leasing
5 Resort SAR cost / key 2,120,000 2,950,000 3,780,000 & acquisition costs.
Average GFA / key 200 m2 240 m2 270 m2
SAR cost / m2 10,600 12,300 14,000 Hospitality Notes
Excludes loose furniture, white goods, OS&E, artwork and internal planting.
SAR cost / key 1,239,000 2,119,500 3,000,000
5 Hotel Average GFA / key 118 m2 188 m2 250 m2 Carparking Notes
SAR cost / m2 10,500 11,250 12,000 The benchmark rates are based on 35-40m2 average parking space per bay.
4 Hotel SAR cost / key 774,000 933,250 1,092,500 Landscaping Notes

Average GFA / key 90 m2 103 m2 115 m2
mechanical & electrical services, special features and earth works. Factors such as, volume and density,
SAR cost / m2 8,600 9,050 9,500 specification level and features will impact the complete SAR/m2 cost.
UAE cost of construction Definitions
Low Avr or mid High Basis & Assumptions
AED/m2 AED/m2 AED/m2 • The m2 area based on GIA
• The benchmark rates included are a range of indicative UAE construction costs based on JLL project
specification level, structural solution can impact the cost.
Residential High Rise 4,050 5,800 8,000 • Low range: assumption is based on low-medium specification and verified against JLL benchmark
Villa’s 4,500 6,000 7,500 projects
• Average range (rates in black): is based upon the average rate / m2 of a group of categorised

benchmarked projects. This will differ from the mid range
• Mid range rates: are based upon the midpoint of the low - high rates
Retail Strip Retail 3,500 4,000 4,500 projects
Community /Regional 4,500 5,500 6,500
General Exclusions

Capital contributions to third Marketing cost & expense land cost All works outside the plot
Commercial Low - Mid Rise (S&C) 4,250 5,375 6,500 parties, tenants or authorities boundary
Low - Mid Rise (Fit Out) 3,500 5,500 8,000 Municipality connection cost
Master infrastructure & utility cost
Local authority charges, road Inflation professional fees
Abnormal ground conditions
closures, etc.
Contingency
Car Basement 3,200 3,600 4,000 Grey & rain water recycling system
Client insurances
Parking Above Grade 2,250 2,750 3,250 Waste management
Value Added Tax (VAT) or other
Taxes Facility management equipment
Public Public Parks & Landscape 250 490 900 & expense
Amenities Local Mosque 3,900 4,600 5,800
Friday Mosque 6,500 9,150 12,000
Retail Notes
Hotels Low Avr or mid High
Residential / Commercial Notes
5 Resort AED cost / key 1,450,000 2,495,000 3,600,000 Excludes loose furniture, white goods, OS&E, artwork, internal planting, active IT equipment and leasing
Average GFA / key 120 200 335 & acquisition costs.
AED cost / m2 8,500 13,260 16,000
Hospitality Notes
Excludes loose furniture, white goods, OS&E, artwork and internal planting, TV and AV system.
5 Hotel AED cost / key 975,000 1,940,000 3,100,000
Average GFA / key 125 200 275 Carparking Notes
AED cost / m2 7,500 9,775 11,250 The benchmark rates are based on 35-40m2 average parking space per bay.
Landscaping Notes
4 Hotel AED cost / key 815,000 1,295,000 1,600,000 mechanical & electrical services, special features and earth works. Factors such as, volume and density,
Average GFA / key 105 125 140 specification level and features will impact the complete AED/m2 cost.
AED cost / m2 6,500 8,880 10,250
Case Study: High Rise Definitions
Residential Tower
We have included built-up unit rates for a high-rise residential tower, G-20+. The rates are an average for • Bulk Excavation & Disposal: based on sand soil material only, excludes any work related to hard rock,
Egypt, KSA and UAE project locations, assuming a traditional procurement route. contaminated material treatment and special systems to support adjacent structures
• Rebar: cut & bend costs included, grade B500B (UAE), 60 (KSA) and B500B (Egypt), 12-32mm dia bars
Preliminaries • Structural Steel: excludes fire protection coating and corrosion protection
Egypt: EGY 8% – 12% • Concrete: grade 40/50, excludes admixtures and additional temperature control costs, minimum load
Saudi Arabia: KSA 12% - 15% volumes are applicable
United Arab Emirates: UAE 11% - 15% • Façade: double glazed, standard manufacturing specification; glass thickness and unit size, typical
solar treatment, stick system powder coated aluminum, we have not considered alternative types of
façade systems
MEP Value • Preliminaries: percentage value of the total measured works based on traditional procurement
Egypt: EGY 25% - 30% • MEP: percentage of the total construction cost value
Saudi Arabia: KSA 27% - 33% Costs are based on Q4 2021, and priced in local currencies (Egypt – EGP, KSA – SAR and UAE – AED)
United Arab Emirates: UAE 25% – 30% The rates provided are intended to give an indication of the current market, actual project rates will vary
based on individual factors and market conditions. We recommend that the rates are not relied upon
Structural Steel / T for commercial or investment purposes and to engage with us directly for cost management advice and
Egypt: EGP 40,000 – 46,000 services.
Saudi Arabia: SAR 14,500 – 16,000
United Arab Emirates: AED 11,000 – 14,000 Actual rates will be dependent on the specific project, site conditions and procurement route, they are
also subject to commodity price fluctuations and inflation.
Rebar / T
Egypt: EGP 21,750 – 24,750
United Arab Emirates: AED 4,100 – 4,500
Façade: typical stick system curtain wall

including vision glazing / m2
Egypt: EGP 5,500 – 7,000
United Arab Emirates: AED 1,300 – 1,700
Concrete (grade 40/50 / m3)

Egypt: EGP 2,500 – 3,100
Saudi Arabia: SAR 450 - 540
United Arab Emirates AED 380 - 450
Bulk Excavation & Disposal / m3

Egypt: EGP 60 – 80
Saudi Arabia: SAR 40 - 60
United Arab Emirates: AED 30 - 50
Tender price inflation (TPI)
Our current and forecast TPI for Egypt, Saudi Arabia and United Arab Emirates. Based on internal project
data and market data.
Egypt UAE
2022 We calculated a tender price inflation growth at 4.5% for 2021. The tender price indices 2022 Our views on the market sentiment is looking toward future project developments
7% are forecast assessing commodity and construction material trends against general 3.5% with the focal point of the current Vision programmes. We calculated our tender price
inflation on a month-by-month basis. Our 2022 TPI forecast suggests a further increase inflation for 2021 at 1.5% Y-o-Y, linked closely to the commodities trends we forecast this
from 2021 which could reach between 5% to 9% inflation. to increase between 2% to 5% for 2022.
TPI High Low
TPI High Low
KSA
2022 We tracked KSA tender price indices growth at 4% Y-o-Y for 2021 and a forecast of 5%
5% for 2022 which considers the consequence of increased commodity metal prices since
2020 and reduced expatriate labour force availability within the kingdom. Our forecast
TPI excludes hyper inflation relating to remote gigaprojects whereby each project
should be evaluated as a stand-alone project.
Footnote: Our 2022 TPI is forecast as of Q1 2022. We will continue to monitor factors including key
construction tender rates, commodity prices and rate of inflation on a quarterly basis. And will provide
JLL | MENA Construction Economic & Cost Insights an updated TPI forecast after Q2 2022. JLL | MENA Construction Economic & Cost Insights
Dubai Abu Dhabi Cairo
Emaar Square, Building 1 Abu Dhabi Trade Centre Building Star Capital 2, 14th Floor,
Office 403, Sheikh Zayed Road Office No. 3, Tourist Club Area Office 141, 2 Aly Rashed Street,
PO Box 214029, Dubai, UAE PO Box 36788 Abu Dhabi, UAE Heliopolis, Cairo,
Cairo Governorate, Egypt
Tel: +971 4 426 6999 Tel: +971 2 443 7772
Fax: +971 4 365 3260 Fax: +971 2 443 7762 Tel: +20 2 24801946
Jeddah Riyadh Al Khobar
Jameel Square, 17th Floor, South Tower, Level 21, Al Khobar

Level 2, Suite 209 Abraj Attawuniya Gate Tower
Tahliya & Andalus King Fahd Road King Fahed Road
Streets Junction
PO Box 2091 PO Box 13547 PO Box 32348

Jeddah, Riyadh, Al Khobar,
Saudi Arabia 8909 - 23326 Saudi Arabia 11414 Saudi Arabia 31952
Tel: +966 12 660 2555 Tel: +966 11 2180 303 Tel: +966 1 3 3308 401
Fax: +966 12 669 40 30 Fax: +966 11 2180 308
With other MEA offices in: Johannesburg and Casablanca
For questions and enquiries, please contact:
Ben Jackson Laura Morgan MRICS Maroun Deeb

Head of P&DS – MENA Associate P&DS - MENA Head of P&DS KSA
Benjamin.Jackson@eu.jll.com Market Intelligence Lead Maroun.Deeb@eu.jll.com
laura.morgan@eu.jll.com
Gary Tracey MRICS Steven Blandford MRICS James Esau MRICS

Director - Head of Cost Director - Head of Cost Director - Head of Cost
Management, MEA Management, Abu Dhabi Management, Dubai
gary.tracey@eu.jll.com steven.blandford@eu.jll.com james.esau@eu.jll.com
Louise Collins Albinas Kontrimas Ian Hawkes

Head of P&DS, UAE Director - Head of MEP Head of Cost
louise.collins@eu.jll.com Cost Management, MEA Management, KSA
albinas.kontrimas@eu.jll.com ian.hawkes@eu.jll.com
Mohamed Tawfik MRICS Mohamed Nabil

Head of Cost Head of P&DS, Egypt
Management, Egypt mohamed.nabil@eu.jll.com
mohamed.tawfik@eu.jll.com
www.jll-mena.com
COPYRIGHT © JONES LANG LASALLE IP, INC. 2022.
This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are
inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee
that the information in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without
notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may cause future realities to be materially different from
those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from the views expressed in this report.
No investment or other business decisions should be made based solely on the views expressed in this report.
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MENA Construction

Economic & Cost Insights

JLL | MENA Construction Economic & Cost Insights

$70 per BBL $156B

Egypt KSA UAE

Projects Residential $4,338M

Project Award Analysis

2021/2022 Residential $3,424M

Copper Aluminium Iron Ore

October October December *March Metal Prices

+51% +45% +48%

$41 $82 $74 $ 126

Egypt KSA UAE

Generally, the steel rebar year-on-year price

Steel Rebar Prices

Source: UAE & KSA – MESteel, Egypt – Ministry of Housing

The three dimensions of sustainable

Egypt Vision 2030 focuses on improving the

The different futures

Source: United Nations Climate Change

In Policy Declaration / Declaration /

Carbon emissions from building Carbon emissions avoided from use of

“A Net-Zero Energy Building is a very highly energy

Replacing Regional passive Energy modeling

Embodied Carbon of Buildings Source: Buildpass (UK)

5 Carbon offset credits

5. Integrate emissions metrics in 7. Engage in section initiatives for best

9. Introduce a low-carbon governance to

Supply Chain Adapting to Decarbonisation

Retail Strip Retail* 10,000 13,000

Hotels Low Average High Residential / Commercial Office Notes

4 Hotel SAR cost / key 774,000 933,250 1,092,500 Landscaping Notes

Façade: typical stick system curtain wall

Concrete (grade 40/50 / m3)

Bulk Excavation & Disposal / m3

TPI High Low

TPI High Low

Jeddah Riyadh Al Khobar

Jameel Square, 17th Floor, South Tower, Level 21, Al Khobar

PO Box 2091 PO Box 13547 PO Box 32348

With other MEA offices in: Johannesburg and Casablanca

For questions and enquiries, please contact:

Ben Jackson Laura Morgan MRICS Maroun Deeb

Gary Tracey MRICS Steven Blandford MRICS James Esau MRICS

Louise Collins Albinas Kontrimas Ian Hawkes

Mohamed Tawfik MRICS Mohamed Nabil

JLL | MENA Construction Economic & Cost Insights

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