Infrastructure projects to lift UAE construction sector

Reuters

• Report forecasts growth of 3%
• Road and rail projects ‘will help expansion’
• More investment in tourism and retail expected

While the residential segment continues to dominate the $94 billion UAE construction sector, investments in transport and renewable energy infrastructure will help propel future growth, a new report says.

Government transport projects such as rail and road infrastructure, energy ventures and sewerage and water infrastructure projects, will fuel the construction sector’s expansion, according to the report from GlobalData, a London-based data analytics and consulting firm.

Significant capital has been spent on the UAE’s transportation and renewable energy sectors in recent years. 

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Dubai announced last year a AED18 billion ($4.9 billion) “blue line” Metro project adding 30 km of rapid transit rail lines by 2029 alongside the existing red line and green line networks. 

This expansion, together with the introduction of the Etihad Rail passenger train, will add considerably to the ability of Dubai’s residents to move about with ease. 

The new line, which will have 14 stations, will bring rail connections to the city centre to fresh areas of urban Dubai, meaning profitable opportunities for real estate investors to develop those locations.

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As part of the UAE’s push to increase the proportion of electric vehicles (EVs) to 50 percent of all cars on its roads by 2050, announced by the country’s minister of energy and infrastructure, Suhail Al Mazrouei, last year, electric vehicle charging stations will be installed in all emirates and close to borders.

The GlobalData report estimated the size of the UAE’s construction market at $94 billion last year, with annual growth of 3 percent forecast between 2025 and 2028.

Residential construction accounted for the lion’s share of the market, as the real estate sectors in Dubai and Abu Dhabi saw record-breaking levels of growth.

The Dubai Land Department data recorded 166,400 real estate transactions, valued at AED634 billion ($172.61 billion), in 2023.

Real estate investments grew 55 percent year on year to AED412 billion, propelled by 113,655 investors, including 71,002 new entrants, up 20 percent on the previous year.

In Abu Dhabi, property sales in the residential sector were up 83 percent year on year in 2023, as new launches enticed buyers to the off-plan market.

However, the GlobalData report forecast that increased investments in the tourism and retail sectors would power growth in the commercial construction sector. 

It said categories likely to see growth included leisure and hospitality buildings, office spaces, outdoor recreational facilities and retail establishments. 

Similarly, industrial construction projects, including chemical and pharmaceutical plants, manufacturing facilities, metal and material production and processing plants, and waste processing facilities, are likely to increase. 

Investments from both the public and private sectors in the manufacturing and industrial spheres will pay for this growth, the report said.