Tender price conditions
A recent MEED article, claimed that tendering conditions in the UAE construction sector are promising, with a significant pipeline of projects worth over US$356bn, driven by both private real estate developments and public building initiatives.
Major projects like The Oasis, Azizi Venice and Ramhan Island are indicative of the construction market's vibrancy, with various housing units, hotels and commercial spaces being developed. Notably, public-private partnerships are being utilised to address affordable housing needs, as seen in the Balghaiylam Abu Dhabi project.
Contract awards have been consistently increasing, with 2023 surpassing the previous year's total, instilling further investor confidence. According to MEED, as of October 2023, there were contracts worth nearly US$8bn in the bid evaluation stage, indicating continued growth and opportunities in the sector.
Source: Turner & Townsend survey
Survey results:
Approximately 28 percent of respondents characterised the current conditions as marked by moderate competition and tender prices, while another 25 percent observed strong competition alongside moderate tender prices. This marks a shift from our 2022 findings, where 34 percent of respondents noted moderate tendering conditions amidst strong competition. Moreover, a matching sentiment persists from our previous survey, with 28% highlighting a shortage of contractors, while 44 percent emphasised minimal competition accompanied by higher tender prices.
Looking ahead to the end of 2024, anticipation among respondents suggest a trajectory of increasing tender prices. A significant 69 percent foresee a rise, with the majority (77 percent) expecting a moderate increase of 3-4 percent. On the contrary, while 13 percent anticipate stability in prices, 19 percent predict a notable decrease exceeding 5 percent.
Projecting further into 2025, a majority (66 percent) of respondents foresee tender prices continuing to rise, contrasting with 22 percent who anticipate a decrease and 13 percent who expect tender prices to remain stagnant.
Survey findings reveal a diverse landscape within the UAE construction market, the majority anticipating tender price increases by the end of 2024. Overall, the outlook for 2025 remains positive, with a majority expecting continued price increases.
Source: Turner & Townsend survey
“With the combination of a more regulated real estate market and incentives for longer term investment driving population growth, it’s difficult to see a significant tail off in market conditions in the short term. As such, we expect tendering conditions to remain similar for the next 1-2 years. The market may also experience a continued shortfall of suitable contractors, due to an exodus of major global contractors and the lures of the project pipeline in KSA, leading some UAE contractors to expand their operations regionally.”
David Griffiths Director, UAE Real Estate Lead, Turner & Townsend
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