Sustained growth and positivity in the UAE construction market continues
26 September 2024
Currie & Brown, a leading provider of project management, cost management, and advisory services, forecasts construction costs to rise 2-5% annually as the demand for new infrastructure, residential, commercial and leisure attractions continue to grow in the UAE.
Dubai, September 2024
Following record visitor numbers in 2023, major airport expansion and hospitality projects are underway across the Emirates to meet the continuing tourism growth. Increased demand for infrastructure will put pressure on construction costs, particularly in the hotel and leisure sectors.
Currie & Brown’s latest UAE Market overview report reveals a wealth of opportunities and challenges as the sector works to meet the UAE’s ambitious tourism goals.
It also focuses on the unprecedented growth in tech projects, as the UAE government continues to position the country as a global technology and innovation hub. The Emirates aim to attract investment and global talent by expanding data centre infrastructure to support cutting-edge AI research, cloud computing, and big data processing requirements
Doug McGillivray, Regional Managing Director, UAE and Oman at Currie & Brown, stated: “It is an exciting time for the UAE as it positions itself as a global hub for tourism, technology and innovation. With building costs being significantly lower than other major global cities, there are huge opportunities for developers and investors. Thanks to our robust data and in-depth market insight, we’re able to help our clients successfully navigate future risks and rewards, ensuring smooth project delivery.”
Key insights from the report
Currie & Brown’s comprehensive report sheds light on the current state and future prospects of the UAE construction industry:
- Building Asset Costs: The comparative building costs, on average, to construct a standard residential high-rise in the UAE remains significantly lower than in other major global cities. Modern infrastructure, world-class amenities, and business-friendly environment, make it a desirable location for both residents and investors.
- Unit rates: Steel prices have been volatile, and concrete costs will rise with demand. MEP components, especially copper, are also increasing in price. Companies should monitor unit rates closely to allow for agile procurement and better budget management, reducing the risk of delays or overruns caused by price hikes
- Supply change challenges: Developers face supply chain bottlenecks and price inflation triggered by geopolitical conflicts and the competitive dynamics with Saudi Arabia. This could drive up construction costs and cause delays. To mitigate these risks, companies will need to diversify supply sources and adopt more flexible project management strategies such as securing labour via frameworks.
Forward-looking projections
Currie & Brown anticipates the UAE will outperform its Gulf counterparts for the rest of the year. Tourism and long-term resident visas are driving economic growth, contributing to job creation, infrastructure development, and cultural exchange, while also positively impacting small businesses and regional investment.
Sustained growth in the UAE will offer a wealth of opportunities for the construction industry over the coming months and years, although increasing costs will require careful oversight. Rigorous project management and detailed analysis of costs will be fundamental to the successful delivery of projects.