Market Research Report
United Arab Emirates Construction Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)
|United Arab Emirates Construction Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)|
Published: May 13, 2021
Mordor Intelligence Pvt Ltd
Content info: 150 Pages
Delivery time: 2-3 business days
The United Arab Emirates construction market was valued at USD 101.45 billion in 2020, and it is expected to reach a value of USD 133.53 billion by 2026, registering a CAGR of 4.69 % over the period of 2021-2026 (henceforth, referred to as the forecast period).
The Construction Market crisis in Dubai has been impacted by the Covid -19 which led to the halt of construction work. This in turn has led to a reduction in net profits in the sector.
The government of the country is also focusing on smart cities and at a similar front plan to digitize up to 1000 government services and install 2000 wi-fi hotspots in the country. Moreover, liberal trade policies in the country are attracting foreign investors, propelling the construction market in UAE.
The construction sector is the essence of the UAE economy and it is very encouraging to see that the industry is expecting rapid growth in the coming years. The construction industry plays an important role in the economic uplift and development of the country
Tourism Construction in Dubai to Boost Construction Sector
United Arab Emirates construction market is expected to grow at a brisk rate during the forecast period on account of upcoming events in the UAE i.e. Expo 2020 (originally scheduled for 20 October 2020 - 10 April 2021. However, due to the COVID-19 pandemic in the United Arab Emirates, the new dates are 1 October 2021 - 31 March 2022) and increasing inclination of government to boost tourism in the country.
Construction demand in Dubai continues to be strong in the run-up to Expo 2020, supported by new tourism and hospitality projects, and public spending on infrastructure, although rising materials costs and funding constraints are exerting pressure on profit margins.
Countries with the most projects in the construction pipeline in the hotel segment are Saudi Arabia with 186 projects/66,866 rooms and the United Arab Emirates with 161 projects/45,753 rooms. Following distantly is Qatar with 60 projects/15,030 rooms, then Egypt with 57 projects/14,168 rooms, and Oman with 34 projects/6,891 rooms. Dubai continues to lead the construction pipeline in the United Arab Emirates with 121 projects/35,837 rooms.
Construction Projects in Pipeline To Boost the Market
The outlook looks promising, as the government continues with its infrastructure plans, given various government initiatives such as the Energy Strategy 2050, the Sheikh Zayed Housing Programme, and the Dubai Tourism Strategy.
Infrastructure projects are a key part of the UAE's economic expansion, as not only the Emirate but the overall Gulf Cooperation Council (GCC) region, still has huge infrastructure needs, as it seeks to build efficient transport and logistics networks as well as reliable supplies of clean energy.
Also, Israel and the UAE have reached a historic deal to normalize ties opening up investment opportunities, where the countries agreed to develop a joint strategy to boost co-operation in the energy sector. Abu Dhabi aims to sustain long-term growth: In the long-term, investments in Abu Dhabi's commercial building sector will help to offset an expected decline following the conclusion of Expo 2020.
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. Abu Dhabi's ambitions in the commercial infrastructure space, its government aims to attract 7.9 million tourists annually by 2030 under the auspices of its Abu Dhabi 2030 Plan. Furthermore, the emirate hopes to expand its retail and office space to 4 million and 7.5 million square meters by 2030.
The UAE has about half of the pipeline value of Saudi Arabia with about USD 288bn of planned projects. An additional concern for the UAE construction is that the USD 125bn of future projects in the UAE is low compared to the USD 145bn of projects in execution, suggesting a shrinking market.
The UAE construction market is highly competitive, with the presence of major international players. The UAE construction market presents opportunities for growth during the forecast period, which is expected to further drive market competition. With a few players holding a significant share, the market studied has observable level of consolidation.