The Built Asset Blog
A UAE Market Update
The UAE has experienced a shifting momentum of activity over the past decade with 2009 onwards being difficult years for the market. After a timid 2013, the market is finally showing real signs of recovery and prospective growth suggesting that the construction market will remain strong this year.
The construction sector appears to be returning to near full-capacity, with a number of major megaprojects in the pipeline and the ramping up of social infrastructure spend. The UAE’s construction sector remains dominated by the emirate of Abu Dhabi and Dubai as both cities are the country’s key drivers. Whilst Dubai’s real estate market is looking stronger and more sustainable, Abu Dhabi’s market has remained stable through the first and second quarters of 2014. However, a growing pipeline of projects in the capital may increase construction spend in the latter half of 2014 and early 2015.
Construction inflation of which materials comprise one key component has been relatively stable in the first half of the year; however, we are expecting this to change in the second half of the year with single digit increases continuing through 2015. The concerns from contractors is realistic looking forward, however it is important to understand that the market is changing from a period of negative to low inflation over the last few years to a period of moderate increase and hence the concerns around the transition are inevitable.
We have witnessed an increased number of projects being re-energized due to funding being re-evaluated, and there are a number of large developments both within the property and infrastructure sectors, which are due to be awarded this year.
As the construction industry soaks up resources with the increase in workload, both labour and materials logistics supply become challenges that need to be handled. The UAE market has the benefit of a having a more developed infrastructure for both labour resources and materials handling and will see this fully exploited in the coming years. Furthermore, health and safety, welfare and human rights issues are increasingly being considered as the profile of the development grows; hence, we advise clients to consider the matter and relook at their own social responsibility and reputational risks.
The volume of announced and planned projects in the UAE in 2014 is expected to be valued at US$ 315 billion, and as of May 2014, US$ 212 billion worth of construction projects are currently under construction. Looking ahead, 2014 is expected to be the year in which the UAE’s construction industry returns to solid growth.
To read more about EC Harris’ market view and insights on the UAE in 2014, please click here.
The construction sector appears to be returning to near full-capacity, with a number of major megaprojects in the pipeline and the ramping up of social infrastructure spend. The UAE’s construction sector remains dominated by the emirate of Abu Dhabi and Dubai as both cities are the country’s key drivers. Whilst Dubai’s real estate market is looking stronger and more sustainable, Abu Dhabi’s market has remained stable through the first and second quarters of 2014. However, a growing pipeline of projects in the capital may increase construction spend in the latter half of 2014 and early 2015.
Construction inflation of which materials comprise one key component has been relatively stable in the first half of the year; however, we are expecting this to change in the second half of the year with single digit increases continuing through 2015. The concerns from contractors is realistic looking forward, however it is important to understand that the market is changing from a period of negative to low inflation over the last few years to a period of moderate increase and hence the concerns around the transition are inevitable.
We have witnessed an increased number of projects being re-energized due to funding being re-evaluated, and there are a number of large developments both within the property and infrastructure sectors, which are due to be awarded this year.
As the construction industry soaks up resources with the increase in workload, both labour and materials logistics supply become challenges that need to be handled. The UAE market has the benefit of a having a more developed infrastructure for both labour resources and materials handling and will see this fully exploited in the coming years. Furthermore, health and safety, welfare and human rights issues are increasingly being considered as the profile of the development grows; hence, we advise clients to consider the matter and relook at their own social responsibility and reputational risks.
The volume of announced and planned projects in the UAE in 2014 is expected to be valued at US$ 315 billion, and as of May 2014, US$ 212 billion worth of construction projects are currently under construction. Looking ahead, 2014 is expected to be the year in which the UAE’s construction industry returns to solid growth.
To read more about EC Harris’ market view and insights on the UAE in 2014, please click here.
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