Report Overview

Booming tourism, the government’s increasing investments in the development of infrastructure and energy sector, and rising demand for sustainable housing are expected to boost the growth of UAE Construction Market during the forecast period between 2024 and 2030.

UAE Construction Market – Industry Trends & Forecast Report, 2030

UAE Construction Market size by value was estimated at USD 94.56 billion in 2023. During the forecast period between 2024 and 2030, the UAE Construction Market size is expected to expand at a CAGR of 5.10% reaching a value of USD 118.43 billion by 2030. The UAE Construction Market is fueled by several factors. Government investments in infrastructure, housing, and tourism are a major driver. This includes ambitious sustainability goals and a focus on renewable energy.  Demand for high-end residential properties and government support for homeownership are keeping the residential sector strong. Additionally, the construction industry is embracing digital transformation with technologies like AI and prefabrication to improve efficiency.

Construction – Overview

Construction is the process of bringing an idea to life and transforming raw materials and blueprints into buildings, bridges, and other structures. It involves skilled professionals like architects, engineers, and laborers. From planning and permits to foundations and finishing touches, construction ensures a safe and functional space is built. This vast industry includes building houses, skyscrapers, roads, dams, and more, shaping the world around us.

UAE Construction Market

Growth Drivers

Heavy Investments in Infrastructure Development

The UAE Construction Market is witnessing robust growth driven by substantial investment in infrastructure development. Key projects, including the expansion of transport networks, smart city initiatives, and the construction of world-class airports and seaports, are at the forefront. Government strategies like the UAE Vision 2021 and the Dubai Plan 2021 are channeling funds into urban development, enhancing the sector's dynamism. Additionally, the upcoming Expo 2020 has accelerated infrastructure investments, positioning the UAE as a global hub for tourism, trade, and logistics, thereby fostering sustained growth in the construction industry.

Challenges

Fluctuations in Oil Prices

The UAE Construction Market is facing uncertainty due to fluctuating oil prices. As oil revenue significantly influences the national economy, variations in prices affect government budgets and project funding. This volatility leads to delays and scaling back of construction projects, impacting contractors and suppliers. While lower prices may reduce operational costs, they also decrease available capital for new developments. Conversely, higher prices can boost investment but increase material and labor costs. Balancing these factors is crucial for stakeholders to navigate the challenges and maintain growth in the sector amidst unpredictable oil price movements.

Impact of Escalating Geopolitical Tensions on UAE Construction Market

The escalating geopolitical tensions, particularly in the Middle East, have significant implications for the UAE Construction Market. Rising political instability can deter foreign investments and delay ongoing projects. For instance, the Qatar diplomatic crisis in 2017 disrupted supply chains, leading to material shortages and increased costs. Additionally, fluctuations in oil prices due to regional conflicts impact government revenues, reducing funds for infrastructure projects. The Yemeni conflict also affects trade routes and increases security costs for construction firms. Despite these challenges, the UAE's strategic initiatives, such as the "Projects of the 50" launched in 2021, aim to attract USD 150 billion in foreign investment to diversify the economy and sustain growth in the construction sector. These measures indicate resilience in the face of geopolitical risks.

UAE Construction Market

Segmental Coverage

UAE Construction Market – By Type of Construction

By type of construction, the UAE Construction Market is divided into Building Construction, Heavy & Civil Engineering Construction, Specialty Trade Contractors, and Land Planning & Development segments. The building construction segment is the largest type of construction in the UAE Construction Market. The segment encompasses residential, commercial, and institutional structures. It is driven by significant investments in infrastructure, tourism, and real estate projects, including iconic skyscrapers, luxury hotels, and expansive residential developments. The demand is fueled by a growing population, urbanization, and the country's vision to diversify its economy away from oil dependency. High-profile projects like the Dubai Expo 2020 and ongoing developments in Abu Dhabi contribute to the segment's dominance, making it a critical component of the UAE's construction industry.

UAE Construction Market – By Type of Contractor

Based on type of contractor, the UAE Construction Market is divided into Large Contractor and Small Contractor segments. The large contractor segment holds the dominant position in the UAE Construction Market. The segment's prominence is driven by extensive infrastructure projects, urban development initiatives, and mega-projects such as Expo 2020, high-rise buildings, and large-scale residential communities. Large contractors have the financial capability, technical expertise, and resources to handle complex and sizeable projects, ensuring their leadership in the market. Their involvement in high-profile, government-backed projects further solidifies their significant market share and influence in the UAE Construction Market.

UAE Construction Market – By End Use

Based on end use, UAE Construction Market is divided into Public and Private segments. The private sector is a largr end use segment in the UAE Construction Market, driven by substantial investments in residential, commercial, and tourism-related projects. The sector has seen significant growth due to the UAE's strategic initiatives to diversify its economy away from oil dependence, coupled with its ambition to become a global business and tourism hub. Major developments in the segment include luxury residential complexes, high-end hotels, shopping malls, and commercial buildings, which cater to the rising demand from both domestic and international investors. The private sector's dynamic expansion is a critical driver of the overall construction market in the UAE.

Competitive Landscape

Major players in the UAE Construction Market include Wade Adams, Al Shafar General Contracting LLC, Al Hamad Group of Companies, AE Arma-Electropanc, Aegion Corp., Bechtel, CB&I LLC, Consolidated Contractors Group, Fluor Corp., Jacobs, Al Futtaim Carillion, Joannou And Paraskevaides Limited (JP), ACC Arabian Construction Company, Arabtec Constructions LLC, Abu Dhabi National Energy Co. PJSC, Emirtec, and Sobha Engineering & Contracting LLC. To further enhance their Market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In November 2023 – Dubai-based developer Wasl granted a construction contract worth AED 1.2 billion (approximately USD 1.4 billion) to China State Construction Engineering Corp., a Beijing-based company, to construct The Island, a 26-acre development that is expected to be the first in the region to allow legal gaming. A total of 1,400 hotel rooms were planned for the development.

• In September 2023 - Hassan Allam Holding, one of Egypt's leading construction companies, announced its expansion into the UAE on the occasion of 'Building Boundless Horizons: From Egypt to the UAE'.

Scope of the Report

By Type of Construction

• Building Construction

• Heavy & Civil Engineering Construction

• Specialty Trade Contractors

• Land Planning & Development

By Type of Contractor

• Large Contractor

• Small Contractor

By End Use

• Public

• Private