The UAE remained the region’s most active construction market in 2024, securing 45% of total awarded contracts in the Middle East and Africa, amounting to USD 40.6 bn, according to JLL’s latest Middle East and Africa Market Review and Outlook report (pdf), citing MEED Projects. The UAE also accounted for 19.4% of the region’s total project pipeline, driven by real estate, infrastructure, and industrial developments.

Residential construction led the UAE’s construction activity, with USD 28.3 bn in project awards, followed by USD 4.6 bn in mixed-use developments.

The UAE’s industrial and logistics construction gained momentum, fueled by booming e-commerce, third-party logistics providers, and rising demand for modern warehouse facilities. Grade A warehouses in prime locations are nearly fully occupied, with record-high occupancy rates of 90-95%, according to JLL’s Abhishek Mittal, highlighting supply constraints, Zawya reports.

Soaring demand has driven rents in key locations like Al Quoz up by 45% y-o-y, with specialized logistics spaces—such as cold storage and fulfillment centers—experiencing even sharper increases, Mittal added.

Dubai’s loss is Abu Dhabi’s gain: As costs rise in Dubai, Abu Dhabi is emerging as a cost-effective alternative, attracting industrial tenants with high-quality infrastructure and lower leasing rates through projects like Kezad Logistics Park and ADAFZ developments.

Construction activity faced challenges from supply chain disruptions and rising costs, JLL said. Tender Price Inflation (TPI) averaged 3% in 2024, driven by elevated material and labor expenses. However, it is projected to ease to 2.5% in 2025 (+/- 2%), as market conditions stabilize with lower interest rates and improved supply chains.

Regionally, construction awards across the Middle East and Africa totaled USD 90 bn in 2024, down a 20.2% decline from the previous year. Saudi Arabia led with 32.7% of awarded contracts, driven by residential, hospitality, and large-scale infrastructure projects, while Egypt (6.8%) and South Africa (4%) focused on housing and industrial developments.

REMEMBER- BNC Network’s had pegged the country’s construction contracts at USD 121 bn in awarded contracts for 2024, reflecting a 14% increase. BNC’s breakdown attributes USD 66 bn to real estate, followed by oil and gas (USD 33.3 bn), utilities (USD 9.2 bn), transportation (USD 9 bn), and industrial projects (USD 3.6 bn). Other estimates suggest a more conservative outlook. Kamco Invest pegged UAE contracts at USD 84.1 bn, with construction accounting for 47.5% (USD 40 bn), while Emirates NBD estimated USD 83 bn, including construction.

OUTLOOK-

The MEA region’s construction market is supported by a robust USD 1.9 tn project pipeline, according to MEED Projects and StatsSA. Lower interest rates and stabilizing commodity prices are expected to encourage investment in 2025, with developers focusing on high-quality, institutional-grade assets, JLL noted.

UAE sector breakdown: Supply is set to rise across all real estate sectors in 2025 in the UAE, driven by investor demand and steady price growth amid limited availability.

  • Offices: 122k sqm of Grade A office space will be delivered, concentrated in DIFC, Dubai Internet City, and Sheikh Zayed Road;
  • Residential: 13.4k units in Abu Dhabi and 40.3k in Dubai are expected;
  • Hospitality: 7.2k new hotel keys are expected in Dubai, primarily in the four- and five-star segments, while Abu Dhabi repositions its hotel assets to boost cultural and business appeal.

Developers are racing to expand logistics capacity: Aldar has committed AED 1 bn to new logistics developments, including the acquisition of the 7 Central logistics hub and adjacent plots in Dubai Investments Park, with plans to develop 233k sqm of Grade A facilities across the UAE. JAFZA is set to deliver an additional 23.2k sqm of logistics space in early 2025 as part of its second-phase expansion.

What does this mean for rents? Despite 300-500k sqm of new logistics supply expected over the next 18-24 months, Mittal believes rental rates will stabilize rather than decline as sustained demand continues to absorb new inventory.

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