UAE Focus

UAE construction market to remain strong

September 2014

UAE’S construction market is set to remain strong this year, according to a new report.

It is predicted to return to near full capacity with a number of mega projects in the pipeline and the ramping up of social infrastructure spend, according to EC Harris’ 2014 International Focus on the UAE report.

“The UAE has experienced a shifting momentum of activity over the past decade with 2009 onwards being difficult years for the market. The dynamic has changed from a period of negative to low inflation over the last few years to a period of moderate increase,” said Christopher Seymour, partner and head of property and social infrastructure at EC Harris.

“The market is finally showing real signs of recovery and prospective growth suggesting that the construction market will remain strong this year.”

The report takes into account the UAE’s estimated real gross domestic product (GDP) growth, accelerated momentum across industry sectors, market conditions and construction tender price levels.

According to EC Harris’ Construction Cost Index, construction prices in the UAE are set to rise by four to five per cent over the duration of the year and approximately six per cent in 2015.

Furthermore, the report highlights key discrepancies between the emirate of Abu Dhabi and Dubai as both cities are the country’s growth drivers. Dubai’s real estate market is stronger and more sustainable while Abu Dhabi’s market is steady; however, the report states the capital may increase construction spend in the latter half of 2014 and early 2015.

“We are seeing tenders in the market covering the full range of projects including large-scale programmes and also smaller schemes right down to small fit-out work. To this extent, the market is showing a healthy profile with opportunities for SME (small and medium enterprises) and large international contractors and joint ventures. Similarly, the supply chain at all levels is seeing strong growth across the range of schemes,” said Seymour.

The volume of announced and planned projects in the UAE in 2014 is expected to be valued at $315 billion, and as of May 2014, $212 billion worth of construction projects were currently under construction.

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