Market Trends of UAE Construction Industry
Rise in demand from tourism sector
The UAE has taken many steps to attract investment and foreigners to help the country recover from the effects of the COVID-19 outbreak. The International Monetary Fund (IMF) raised the country's 2021 economic growth prediction to 3.1%, citing the Emirate's response to the COVID-19 attack. In the next nine years, the UAE plans to launch 50 new economic initiatives to improve its competitiveness and attract USD 150 billion in foreign direct investment (FDI).
The country also embraces the Private Public Partnership (PPP) model, which provides efficient goods and services at a cheaper cost. In 2021, the government of Abu Dhabi unveiled an ambitious plan to buy over USD 2.72 billion in infrastructure partnership projects in various areas, including education, transportation, and municipal works. The PPP initiative was established as part of Abu Dhabi's USD 14 billion 'Ghadan 21' accelerator program to help the economy grow.
Construction Projects in Pipeline to Boost the Market
The outlook looks promising as the government continues its infrastructure plans through various government initiatives, such as the Energy Strategy 2050, the Sheikh Zayed Housing Programme, and the Dubai Tourism Strategy.
Infrastructure projects are vital to the country's economic expansion, as the Emirate and GCC regions have substantial infrastructure needs. Thus, it seeks to build efficient transport and logistics networks and reliable, clean energy supplies.
Also, Israel and the UAE reached a historic deal to normalize ties, opening up investment opportunities. The countries agreed to develop a joint strategy to boost cooperation 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 offset an expected decline after 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 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 sq mt by 2030.
The UAE 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.
