CONSTRUCTION COST PERFORMANCE
An attractive market despite global uncertainty
Tendering conditions ↓
Profit margins ↓
Procurement ↓
Preliminaries ↓
Material costs ↓
Despite the cost of construction increasing in recent years, the UAE remains a cost-efficient country for construction projects, making it an appealing market for investors. Globally, Dubai was ranked 74 at a cost of US$1926 per m² and Abu Dhabi was ranked 76 at US$1872 per m² in our GCMI for the most expensive places to build (m²) across 6 building types. This was significantly lower than Riyadh, ranked at number 37 at US$3112 per m², and other global markets such as London. The UAE was identified as the cheapest place to build within the Middle East.
Source: Turner & Townsend, Global construction market intelligence 2025
Tendering conditions in UAE
Tendering conditions in the UAE remain positive with a steady level of competition and a pool of both local and international contractors. Q1 in 2025 recorded over AED 143bn in contract awards, overtaking Saudi Arabia by almost 50 percent.
Source: Turner & Townsend survey 2025
38 percent of our 2025 survey respondents agreed that there are moderate levels of competition with moderate tender prices. None of our respondents noted intense competition and 25 percent suggested that there is a shortage of contractors with minimal competition.
Overall, the level of competition is seeing a decrease, with the number of international contractors’ involvement declining. This could suggest a saturated market where contractors are being more selective in the tenders they are bidding for. Abu Dhabi is the most competitive market with the highest number of bidders across tenders.
Profit margins
In 2025, there are strong profit margins in the UAE as construction activity continues to scale up. There has been a notable increase in construction material prices, with materials in the UAE now amounting to around 60 percent of construction baseline costs. Compulsory imported materials such as steel, aluminum, concrete and specialist equipment continue to see fluctuating pricing, but inflation and interest rates have begun to stabalise. Tender price inflation (TPI) for 2025 in the UAE is forecast to be 3.3 percent, a slight rebound from 1.9 percent in 2024.
The market is facing a need for accelerated construction activity and qualified contractors with specialist expertise can in turn negotiate higher fees and see positive profit margins. Profit margins on mid- to large-scale projects in the UAE ranged between 8 percent to 12 percent. This is primarily driven by more effective procurement practices, reduced competition in specialist trades, and the ability of experienced contractors to command premium pricing. The stabilisation of interest rates and inflation has also contributed to more predictable cost environments, allowing for more accurate margin forecasting.
Figure 11:
Construction market metrics
Source: Turner & Townsend, Global construction market intelligence 2025
"As the UAE construction market remains highly buoyant, the ever-increasing number of projects has meant that contractors, particularly those with sought after experience, can leverage their position to secure higher margin levels, or more favourable contractual terms. It’s not uncommon to see contractors having double digit margin / OH&P levels as non-negotiables when negotiating tenders."
David Griffiths
Director, Cost Management, Dubai
Procurement
A key requirement in current market conditions is to use effective procurement strategies with early engagement with a strong supply chain. The aim being to ensure contractors are secured at competitive rates and to reduce any potential delays in the project delivery. Strengthening local supply chains and the labour market is a key focus to address the increasing market demand.
Our 2025 survey found that single stage tendering is still the clear chosen method of procurement in the region, due to perception of cost certainty and an offload of risk to the contractor to deliver. The use of negotiated procurement routes has declined in comparison to our 2024 survey, where 2 percent respondents had been experiencing use of this procurement method.
This statistic could be generated from several reasons such as more hybrid and semi-competitive approaches or that more contractors are interested in pricing work, but on their own terms. Respondents believe that the use of design and build procurement routes has increased, highlighting the fact that speed to market is becoming more familiar and needed in the current market conditions.
The UAE market is also seeing the rise of several hybrid and approaches to procuring projects. There has been an introduction to rate fluctuations on key materials, such as concrete and steel, and fully re-measurable contracts or packages to mitigate risk for contractors to generate more interest as competition slows down.
Source: Turner & Townsend survey 2025
Preliminaries for 2025
The UAE is seeing a rise in preliminary costs due to the booming construction market and high demand for skilled labour and contractors, with a decrease in competition.
Dubai and Abu Dhabi saw similarities in both preliminaries and overheads and profit. In 2025, Dubai recorded the highest preliminary costs for larger projects at 14 percent with Abu Dhabi sitting at 12 percent. For smaller projects, Abu Dhabi leads with preliminaries at 15 percent and Dubai at 12 percent.
Figure 13:
Preliminaries and overheads
Source: Turner & Townsend, Global construction market intelligence 2025
"The UAE is seeing a rise in preliminary costs due to the booming construction market and high demand for skilled labour and contractors, with a decrease in competition."
David Griffiths
Director, Cost Management, Dubai
Commodity and material cost data
The UAE’s construction market is facing issues with the supply chain, lead times and material costs. Material cost volatility remains a significant challenge for the UAE’s construction sector. Prices for steel, concrete, and MEP components have shown upward trends driven by global tariff ripple effect, supply chain disruptions and increased demand from regional giga-projects. Project timelines while trying to source sustainable materials is putting further pressure on this. To mitigate these risks, developers are increasingly adopting bulk procurement strategies, exploring local manufacturing and strengthening ties with regional suppliers to reduce lead times and limit cost exposure.
Figure 14:
Material costs
Source: Turner & Townsend, Global construction market intelligence 2025
Figure 15:
Material cost movements
Source: Turner & Townsend, Global construction market intelligence 2025
Figure 16:
Sample construction costs – by item / job typology
Source: Turner & Townsend, Global construction market intelligence 2025
Figure 17:
Asset type average costs
Source: Turner & Townsend, Global construction market intelligence 2025
Figure 18:
Lead-in times
Source: Turner & Townsend, Global construction market intelligence 2025
"The UAE’s construction sector continues to demonstrate resilience and adaptability amidst global uncertainty. Through strategic investments, robust cost planning, and a growing emphasis on sustainability, the industry is well-positioned to deliver long-term value across the project lifecycle while supporting the UAE’s broader development and diversification goals."
Gerhard van Rooyen
Director, Cost Management, Abu Dhabi
Contents
Follow us
