Market Trends of UAE Construction Industry
Rise in Demand from the Tourism Sector
Over the years, particularly in sectors such as real estate, tourism, and infrastructure, the United Arab Emirates has been experiencing significant economic growth. It has increased construction work, attracting many companies bidding for lucrative contracts.
In the first two months of 2023, according to industry experts, Dubai welcomed around 3.1 million tourists, representing a 42% increase compared with the same period last year. In the first two months of the year, the increase in inbound tourism also benefited the lower and midtier segments of the hospitality sector, which saw a rise of 7 to 8 basis points in occupancy revenue per available room of 15%.
In April 2023, Miral, an Abu Dhabi real estate development company, announced its expansion of 16,900 sq. m to Yas Island's Waterworld because of its popularity with locals and foreign visitors. The expansion, scheduled to be completed in 2025, will add 3.3 km of slide sections and increase the number of visitors by 20%, with the addition of 18 new thrill rides and other entertainment expected to make the park a total of more than 60 experiences.
Construction Projects in the Pipeline to Boost the Market
The industry outlook seems promising as the government continues its infrastructure plans through diverse government ambitions, such as the Sheikh Zayed Housing Programme, the Energy Strategy 2050, and the Dubai Tourism Strategy.
Infrastructure projects are vital to the country's economic expansion, as the Emirate and GCC have significant infrastructure needs. Thus, it seeks to build efficient transport and logistics networks and reliable, clean energy supplies.
Also, Israel and the United Arab Emirates achieved a deal to normalize ties, opening up investment options. The countries decided to develop a joint strategy to boost cooperation in the energy sector. Abu Dhabi aims to sustain long-term growth. Abu Dhabi's share of the pipeline is estimated to grow in the coming years as the government prioritizes efforts to expand the Emirate's economic base beyond oil. The Abu Dhabi government aims to attract 7.9 million tourists annually by 2030 under its Abu Dhabi 2030 Plan. Furthermore, the Emirate hopes to grow its retail and office space to 4 million and 7.5 million sq. m by 2030.
The country has about half of the pipeline value of Saudi Arabia, with USD 288 billion in planned projects. An additional concern for the UAE construction is that the USD 125 billion of future projects in the country is low compared to the USD 145 billion projects in execution, suggesting a shrinking market.
