CONSTRUCTION MARKET OUTLOOK
Robust growth, expanding pipeline and an innovative future
The UAE construction market remains strong with a 4.2 percent increase in 2025 and a vast pipeline of projects valued at US$ 772bn. The construction industry has been a key pillar for economic activity in 2025, with the UAE’s ambitious national development plans and investments being the driving force behind this growth. As a result, an annual growth of 4 percent until 2029 is to be expected, with a CAGR of 4.2 percent.
"Construction cost in the UAE market from 2024-2025 has seen a 3-5% growth, especially in the mixed-use/residential market."
UAE MI survey respondent
Source: Turner & Townsend survey 2025
Source: Mordor Intelligence
Construction trends
The construction sector remains an attractive market for investors and developers locally and globally. The scale of the project pipeline, with nearly US$875bn worth of projects planned or underway marks the UAE as the second largest project market in the MENA region after Saudi Arabia. This coupled with positive economic growth, sufficient investments and strategies, and implementation of innovative digital tools and sustainability initiatives highlight the market appeal.
Survey support
"71 percent of our survey respondents agreed that the market continues to warm."
Growth of transportation projects
Transport infrastructure is set to be the UAE’s fastest-growing segment by 2030, reaching a CAGR rate of 5.63 percent by 2030. Efficient transportation infrastructure is critical to enable trade, industry and job creation beyond the traditional oil and gas sectors. Flagship projects include Abu Dhabi’s AI-driven Urban Loop and the AED 22bn hyperloop between Abu Dhabi and Dubai and the AED 20bn Gold Line metro. Investments for sustainable and improved transport infrastructure is key to meet the UAE’s growth ambitions and national visions.
Digital
Figure 4:
UAE key digital innovations on construction projects
AI-powered tools
- mitigates potential risk and challenges
- centralised information for programme and resources
Building Information Modelling (BIM)
- enhanced co-ordination
- streamlined processes
Modular construction
- accelerated project timelines
- time and cost savings
- waste minimisation
- standardised processes
Evolving technology and digitalisation is gaining great momentum across the construction sector. The integration of advanced technologies such as artificial intelligence (AI), Internet of Things (IoT), Building Information Modelling (BIM), digital twin adoption, cloud-based tools as well as smart solutions are being used to improve the delivery of projects. Advanced technologies enable enhanced efficiency and accuracy, streamlined processes, centralised information and reporting, reduced cost delays and improved safety allowing for better decision-making, cost savings and future-proofed data. This benefits the construction industry in the UAE due to the vast number of large-scale and complex projects in the pipeline.
In the UAE, modular construction is being embraced due to its efficiency, process standardisation, accelerated construction timelines and waste minimisation. This addresses many of the ongoing challenges in construction in the region including aggressive timelines and quality assurance. This is an effective method in meeting the growing demand for complex projects in the region.
Source: Turner & Townsend survey 2025
Partnerships with public companies
Projects are increasingly being funded through public-private partnerships (PPPs), and this is set to continue due to the growing demand of large-scale projects. Investment incentives and regulatory frameworks are being used to attract investors to scale up delivery for long-term expansion plans.
Sustainability
Sustainable initiatives and green construction practices are gaining momentum across the UAE. Mandatory green-building requirements for the construction of new buildings are now in place. There are notable investments in renewable energy, carbon-reduction incentives, green building technologies, comprehensive regulation and certification systems, and smart infrastructure. Government strategies such as UAE Net Zero by 2050 strategy and UAE Energy strategy 2050 are driving sustainable development, reflecting the UAE’s commitment to environmental efficiency.
Source: Turner & Townsend survey 2025
56 percent of our survey responses found that there has been an increase in sustainable measures on projects however 46 percent stated that very few projects had a commitment to net zero. We found that there was a 19 percent decrease of respondents noticing sustainable measures on projects from our 2024 survey results but there was a 5 percent increase in the number of projects with a commitment to net zero. This decrease could be a result of the focus on COP28 last year. With strict government strategies and investments now in place to drive sustainability, it is expected to be a major focus in upcoming years, and we expect to see these percentages increase.
Source: Turner & Townsend survey 2025
Contractor landscape
There is a mix of local and international contractors in the region. An increase in international leaders is required due to their advanced expertise, modern technology and digitalisation, and sustainable construction methods which would benefit the region’s major programmes and infrastructure projects. The mix of both local and global contractors is continuing to prompt aggressive pricing competition when securing contracts.
Joint ventures are becoming more common between international and local contractors, blending local market knowledge with international standards of building. The UAE contractor landscape is seeing an increase in new players, which is a result of new legislation benefitting mergers and foreign investments in the region. This is intensifying margin pressures.
Key differentiator trends for the selection of contractors on projects are those who use modern methods of construction, digital tools and have proven green-building track records due to construction trends in the region.
Investment and pipeline
In 2023, The UAE construction market was valued at AED 243bn, and is expected to reach AED 350bn by 2029. Almost AED 300bn worth of contracts were awarded in 2024, with 46 percent of these being within the construction sector. The Northern Emirates is the fastest growing Emirate and predicted to reach 7.65 CAGR by 2030.
The pipeline of real estate, mixed-use developments and infrastructure projects (set to rise at 5.98 percent CAGR until 2030) across the entirety of the UAE will continue to grow due to rapid urbanisation and government investments on residential schemes, industrial zones and transport corridors.
New laws in Dubai have recently been passed to modernise the construction industry. Construction across vital sectors will follow global best practices to allow for best construction results, aligning with the country’s ambitious urban and economic growth strategies and commitment to integrating advanced construction techniques.
Smart cities will continue to be established enhancing the growth of sustainable and innovative developments. Advanced construction, sustainability and technological techniques are set to be used on such projects for enhanced efficiency, again aligning with the country’s development strategies.
Understanding the challenges
The UAE construction industry is facing ongoing challenges. There is a shortage of skilled labour with competition for talent across the Middle East from a limited pool which is affecting project delivery. Specialist skills, particularly digital abilities, are becoming increasingly in demand due to the vast number of major projects and programmes with rapid development timelines and technology requirements. As a result, labour costs are also increasing and there is a need to upskill local talent.
"Resourcing, contractor capability and availability as well as global supply chains will continue to cause issues through 2025 and 2026. High demand for skilled labour and uncertainty in the supply chain is a major challenge."
UAE MI survey respondant
Other challenges include supply chain disruption and excessive lead times, rising material cost, potential for oversupply and escalated construction costs, forecast at 5 percent through 2025 in the UAE.
Source: Turner & Townsend survey 2025