The construction industry in the UAE is expected to grow 6.9% y-o-y by value this year, reaching AED 265 mn, according to the latest industry report by Research and Markets. Sustained growth projections point towards a compound annual growth rate (CAGR) of 5.7%, with output reaching AED 332 mn by 2027.

Construction had a good 1H 2023, despite global economic downturns on the back of various infrastructure investments and surges in residential construction initiatives. With megaprojects underway, construction growth is expected to persist well into the latter half of 2023, and 1Q 2024, the report indicates.

That’s quality real estate: High net investors in the Emirates had quite a bit of an appetite for luxury real estate post covid-19, and the sentiment is expected to continue over the next few quarters. Some of the major luxury residential investments this year include the USD 763 mn Sobha realty in Dubai unveiled in April, as well as Lux Developer’s AED 1.5 bn luxury twin towers in June. Right now, Taraf is constructing Luce in Palm Jumeirah with a development value of USD 95 mn.

Rapid construction growth is also driven by increased real estate projects and investments in non-energy infrastructure. Key ongoing projects outlined in the report include: the Etihad Rail Network, Abu Dhabi Midfield Terminal, and Dubai Urban Tech District. There’s also Abu Dhabi’s Rabdan City which is currently undergoing infrastructure enhancements, and Aldar Properties Gardenia Bay project which is set to commence in Q1 2024.

The only downside is the building material prices: At the start of 2023, property developers were content with lower building material costs which spurred on the new projects, however steel and cement prices have been on the rise since June 2023. The increased material prices potentially pose a threat, squeezing construction projects and potentially slowing them down as the price burden trickles to the consumers.

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