Sector performance - UAE MI 2024

Sector performace

According to GlobalData, the key sectors in the 2023 UAE construction market, were commercial, industrial, infrastructure, energy and utilities, institutional and residential construction (as of August 2023).

Survey findings:

Survey respondents highlighted residential, major mixed-use developments, commercial developments and tourism, leisure and hospitality as the leading sectors in the market during the last six months of 2023, closely mirroring our 2022 survey findings.

Among respondents, 56 percent identified residential as the top-performing sector, while 31 percent singled out major mixed-use developments.

Among respondents operating in Abu Dhabi, 38 percent noted the transport sector as one of the top three performing sectors for the second half of 2023.

Surprisingly, only six percent of survey participants identified industrial, manufacturing and distribution as a top-performing sector.

Our results highlight a clear, sustained demand in key sectors such as residential, tourism and mixed-use developments. Overall, survey findings suggest a nuanced landscape within the UAE construction market, with varying sector performance and evolving priorities among investors and developers. Understanding these trends can inform strategic decision-making and resource allocation within the industry.

Source: Turner & Townsend survey

“The residential sector has experienced growth in the past year, with both established and new developers releasing major projects. There has also been an increase in luxury and ultra-luxury developments, leading to opportunities in other industries such as retail, education, healthcare and hospitality.”

David Griffiths Director, UAE Real Estate Lead, Turner & Townsend

Sector performance outlook

In 2024, the construction sector in the UAE is poised for significant growth across various areas.

Whilst there seems to be a decline in the perceived performance of commercial and corporate office developments, commercial construction is expected to pick up and thrive due to investments linked to the UAE Tourism Strategy 2031, alongside private funding in retail, office and logistics.

Likewise, although our survey results demonstrate a relatively low perception of the industrial, manufacturing and distribution sector as a top performer, which perhaps indicates challenges or less attractiveness in this segment compared to others, we do expect industrial construction to see a boost in the years ahead from increased industrial licenses and enhanced export activities. Likewise, infrastructure construction is set to expand thanks to higher budget allocations and a government push for a sustainable transport system. Energy and utilities construction is also expected to experience growth, backed by governmental investments in clean and renewable energy projects until 2050. In addition, institutional construction could also rise due to improved investments in health and education projects.

In line with our survey sentiment, the residential construction is expected to continue to flourish due to increased real estate demand, supported by an allocation of AED11.5bn (US$3.1bn) for interest-free housing loans as part of the Sheikh Zayed Housing Programme, designed to encourage families to invest in real estate properties.

Spotlight sectors

The residential sector in the UAE continues to show robust demand

of survey respondents noted the residential sector as one of the top three performing sectors of H2 2023. With 56 percent of respondents placing it as the top sector.

The residential sector has demonstrated an impressive performance in recent years. In 2022 and 2023, both sales volumes and values drove upward trends, with total transaction volumes breaking records in the first half of 2023, marking a 43.3 percent increase compared to the previous year.

The overall property market in the UAE is positioned for a promising future, driven by increasing demand for upscale properties from established businesses. Factors such as investor-friendly environments, supportive regulatory frameworks and seamless operations have attracted entrepreneurs worldwide in recent years. These factors collectively suggest a substantial expansion of the UAE's property market throughout 2024.

Our survey results rate the residential sector as one of the top three performing sectors for construction developments in the UAE and with The Organisation for Economic Cooperation and Development (OECD) stressing the need for the UAE’s housing inventory to double in size to accommodate sustained growth, the sector does not show signs of slowing anytime soon.

Looking forward, the UAE’s residential construction projects are set to continue their trajectory toward sustainable, bespoke, customised luxury offerings and a reliance on cutting-edge, efficient, tech-driven construction methodologies and digital tools.

“Developers are constantly juggling innovation, affordability and what buyers want, especially in the trend towards luxurious, sustainable and high-tech homes.”

Adam Ralph Country Manager, Dubai, Turner & Townsend

Investment in infrastructure is key to the UAE’s long-term growth ambitions

of respondents placed major mixed-use developments as one of the top three performing sectors of Q2 2023.

Infrastructure is a critical component of major mixed-use construction projects, providing the foundation for their functionality and sustainability. This includes vital systems like roads, bridges, utilities (such as water, electricity and sewage), telecommunications and transportation networks. Properly planned infrastructure not only enables smooth traffic flow and accessibility but also promotes efficient resource distribution and environmental management. Additionally, strong infrastructure improves the livability and appeal of mixed-use developments by drawing in businesses, residents and investors while supporting economic growth and community unity.

In 2020, it was revealed that as part of the UAE capital’s AED50bn 'Ghadan 21' accelerator programme, geared towards growing its economy, the government planned to buy over AED10bn in infrastructure partnership projects in various sectors, including education and transportation.