JobXDubai

The UAE construction sector is poised for further growth, with a project pipeline valued at approximately $590bn. Despite global challenges, the total pipeline value of unawarded construction projects in the Middle East and North Africa (MENA) region is set to reach $3.9tn, with the UAE holding a significant share at 15%.

Residential Construction Leads the Way

Residential construction captured the highest share of the UAE’s construction market last year, accounting for $125bn (21%) of the total pipeline value. Mixed-use projects represent $232bn (39%) of the pipeline value.

Dubai and Abu Dhabi Construction Growth

Dubai is witnessing a significant 21% year-on-year surge in sales and rental prices, having delivered around 10,000 residential units in Q1 2024. Approximately 25,000 units are scheduled for delivery by the year-end, taking the total residential stock in Dubai to approximately 754,000 units.

In Abu Dhabi, around 1,600 units were delivered during Q1 2024, with an additional 6,000 units in the pipeline for the remainder of 2024. The capital is expected to see its total stock rise to 294,000 units this year.

Hospitality Sector Growth

In the hospitality sector, Dubai witnessed the addition of 2,000 hotel rooms to its existing stock in Q1 2024, primarily focusing on the 5-star category. With another 5,000 keys expected to be added in 2024, Dubai will have a total of 160,000 hotel rooms, while Abu Dhabi will add approximately 500 keys this year, bringing its stock to 34,000 hotel rooms.

UAE Construction Outlook

The UAE achieved a remarkable milestone in 2023, nearly tripling the value of awarded projects compared to the previous year. According to regional projects tracker MEED Projects, the value of these projects stood at $87bn, demonstrating the country’s progress in aligning with its economic diversification and investment goals.

Challenges and Opportunities

Although the upward trajectory of land and construction costs remain a key challenge in 2024, the strong uptake of new projects will ease the pressure and maintain the sector’s growth momentum through the year.

Forecast and Outlook

Taking into account historical construction price trends, prevailing market conditions, the value of the project pipeline, and external factors that may impact construction prices, JLL’s forecast indicates that the UAE is expected to observe a tender price inflation (TPI) of 3% in 2024.