Print
Email
The global construction market is plagued by economic challenges including rising interest rates and recessionary fears. In markets like Australia, construction developers and other related businesses are collapsing every week, and the trend is not expected to slow down anytime soon. In the United States, tech giants have reduced their spending on commercial projects, owing to a significant downfall in revenue.
While most major construction markets are struggling to maintain their growth path, the United Arab Emirates appears to be challenging the status quo. The ongoing real estate boom, coupled with the strong pipeline of mega projects currently underway, means that the construction developers are presented with an unparallel growth opportunity in the Middle East market.
From infrastructure to residential construction projects, the Emirates has increased its investment significantly across different sectors and the trend is projected to further continue in 2023.
In the residential sector, Abu Dhabi Crown Prince approved the US$23 billion project to construct 76,000 houses. The project, planned to be executed over the next five years, has been announced in May 2023. The residential project is aimed at improving the quality of life of the citizens residing in Abu Dhabi.
Abu Dhabi, in May 2023, also announced that the construction work on the third phase of the Al Falah housing project has commenced. The third phase of development activities will drive investment of another US$523 million into the Emirati residential construction sector. Since 2012, the first and the second phase of construction activities have delivered 4,857 homes to Emiratis, according to a report from Abu Dhabi Executive Council.
The program is working closely with the federal and state governments, private sector, and banking firms to achieve the ambitious plan of meeting the growing housing needs of citizens in the Emirates. Consequently, ConsTrack360 expects more rollout of such grants from the short to medium-term perspective, aiding the growth of the residential construction market in the UAE.
In 2023, the construction market and developers in the Emirati nation are also expected to benefit from stable raw material prices. Notably, to keep the cost to a minimum, construction firms such as Danube Properties have enforced a fixed-price contract in the Emirates.
The outlook for the commercial construction sector also remains robust in the UAE over the next five years. The country has emerged as a leading tourist destination over the last decade and is expected to keep attracting millions of tourists more every year going forward. Consequently, hospitality firms have increased their investment in the region, launching new projects to drive market share and accelerated growth.
To tap into the growing hospitality sector, construction firms are also launching their own hotel brand in the UAE. Azizi Developments, for instance, announced that the firm will introduce a new global brand soon, and it will develop and acquire hotel real estate in the Emirati nation and other markets. In addition to its move into the hospitality sector, the firm is gearing up for 2023 completions. Across 45 projects, the firm is expected to deliver 11,000 units in Dubai.
In the commercial sector, corporates are also setting their base in the Middle East, leading to higher investment in the commercial construction sector. As the trend continues over the next three to four years, the UAE will keep presenting robust growth opportunities for players in the sector. All of these factors indicate that the construction market in the Emirates will record strong growth in 2023 and beyond, despite the headwinds affecting other global markets.
To know more and gain a deeper understanding of the construction industry in the UAE, click here.
