MARKET OVERVIEW

Driven by Vision 2030

The UAE’s national plan ‘UAE 2031’ outlines the strategic vision for the country, emphasising economic, social and urban development, and diversification priorities. A key focus of the vision is to implement long-term growth strategies to enhance the quality of life for residents and visitors. Sectors such as infrastructure and transport, technology, renewable energy, real estate and tourism remain resilient as demand surges due to population booms. The development of smart cities with a sustainability and innovation focus are making progress.

As a result, there has been a decrease on the reliance of oil and gas sectors to allow for economic diversification. This is set to grow by a further 4.5 percent in 2025. In 2024, 75.5 percent of the economy was contributed by non-oil sectors reflecting the successful implementation of the UAE’s strategies and strengthening ties with its key trading partners.

"The current market is booming incredibly, with all regions in the UAE extremely busy to meet the countries visions of growth."

UAE MI survey respondent

UAE’s GDP

The UAE economy is projected to be robust, with the International Monetary Fund noting that throughout 2025, the economy will grow to 4 percent. The non-oil economy recorded a growth rate of 4.5 percent during the first nine months of 2024, resulting in an overall GDP growth of 3.7 percent. In 2025, forecasted GDP growth is set to be 4.7 percent with a further accelerated forecast of 5.7 percent in 2026. This estimate is a result of continued sustainable growth of the non-hydrocarbon and the resumption of oil production in the hydrocarbon sector. This could be a result of expected gradual lifting of oil production cuts which began in Q2 2025.

"The UAE’s projected economic growth is closely tied to the scale of ongoing infrastructure and real estate developments. As oil production resumes, it is expected to boost government spending on major public projects, especially transportation and utilities. This will in turn generate broader economic benefits across multiple sectors."

David Griffiths

Director, Cost Management, Dubai

Inflation

According to the Central Bank of the UAE, inflation has decreased to 1.4 percent in quarter one of 2025, its lowest since December 2023. The overall forecast for 2025 is set to rise slightly to 1.9 percent, which is still below the world average of 2 percent. This inflation percentage of 1.9 is forecast to persist to 2026, as a result of a continued downward trend of transportation costs, a strong US dollar and a slowed rate for food and beverage inflation.

There was however an increase in non-tradable inflation in quarter one of 2025, with a noticeable increase in housing prices. This is a persistent challenge, particularly for Dubai, as housing inflation rates continue to increase at a faster rate than Abu Dhabi. For the first quarter of 2025, Abu Dhabi had an inflation rate of 0.5 percent and Dubai ha a rate of 3.1 percent. It is expected that the consumer price index (CPI) will slow to an average of 2.8 percent year-on-year.

The relatively low inflation rate in the UAE has helped maintain budget stability across major projects. However, the disparity in housing inflation between Abu Dhabi and Dubai is influencing labour mobility and contractor pricing strategies, which is a dynamic that needs careful oversight to prevent unexpected cost increases.

Sector performance

According to GlobalData, this year, mega projects in the real estate, tourism and infrastructure sectors have saw major development with an AED 59 billion federal budget. Major public infrastructure, mixed-use and residential developments, utilities and energy projects continue to be the main areas of focus as they align to several government strategies, allowing for continued population, economic growth and diversification efforts in line with the country’s visions.

Such projects within these key sectors are being supported by public and private sector investments with significant government budget spends and policy backing. As a result, the construction market is expected to grow by an average of 4 percent from 2026-2029.

Abu Dhabi is gaining strong momentum, particularly in infrastructure and mixed-use developments. The rising costs for materials and labour is increasing the demand for early-stage cost planning and value engineering to ensure financial sustainability.

Through our 2025 survey, responses supported this sentiment, with all the above sectors being in the top 10 performing markets in the last six months. Data centres were also seen as a major sector in the UAE within our survey.

Source: Turner & Townsend survey 2025

However, as predicted in 2024, the transport infrastructure and oil and gas and natural resources sector has expanded in 2025.

"The housing market's performance over the next 12 months will be a major impact on the construction industry. Overall, there is still a net migration of people and finance to the UAE, so I expect growth to continue."

UAE MI survey respondant

"All sectors are busy with Infrastructure enhancements, residential, hospitality and hotel and aviation being the biggest areas of growth."

UAE MI survey respondant

"Large number of very large infrastructure projects are being released to market."

UAE MI survey respondant

Real estate sector

As a result of economic diversification and the booming population, the real estate sector continues to be experiencing robust demand with significant opportunities for real estate investment across the entire region. This is shown through the continued growth of foreign investment and a total of AED 239m in real estate transactions in Q1 2025.

Residential

Residential construction is thriving across the region due to urban expansion and population growth. Smart city development is prompting digital transformation, sustainability and urban innovation within the residential sector. With Dubai being ranked as fourth globally in the IMD Smart City Index 2025, the advancements the emirate is making as a global leader in smart city development is notable. Initiatives across the UAE, such as the Sheikh Zayed Housing Programme, and strong private sector investment are helping to meet growing demand by allowing further assistance for residents to become homeowners, underscoring the government’s commitment to bolstering the residential market.

Major mixed-use developments

Major mixed-use developments remain key to the UAE due to effectively combining multiple assets and creating an integrated community with residential, commercial and retail spaces in one destination. Expo City, Al Maryah Island and RAK Central are prime examples of ongoing major masterplans incorporating mixed-use developments across the emirates.

Commercial

Meanwhile, the UAE commercial market is experiencing robust demand due to lack of availability of high-specification office space which incorporates integrated technology and sustainability which occupiers are now expecting. This demand is putting pressure to develop high-quality commercial spaces, with Abu Dhabi aiming to have 11.6 million sqm of office space available by 2030.

Tourism and hospitality

The UAE remains a global leader in the tourism sector, and it is expected to contribute around 13 percent of GDP. Dubai recorded a 7 percent year-on-year rise in international visits from January to April 2025. Abu Dhabi also perceives long-term tourism growth with 7.9 million tourists expected to visit annually by 2030.

The UAE Tourism Strategy 2031 is driving this, with a goal of hosting 40 million guests by 2031 through new investments worth AED 100bn. Vast pipeline of tourism and hospitality construction projects, further highlighting the strength of the emirate’s tourism infrastructure.

Data centres

The data centre market is accelerating in the UAE and Middle East, with the sector expected to triple over the next five years, as reported in our GCMI 2025 report. Long-term plans are in place to enhance technological advancements and the demand for digital infrastructure. With a vast pipeline of projects supported by copious funding from government authorities, as the region continues to be a leader in the digital landscape.

Infrastructure sector

Transportation infrastructure

The country has strategic infrastructure plans as the country’s economy continues to expand. Several major transport infrastructure projects are already underway, including the hyper-connected Etihad Rail project, a key enabler of sustainable rail for the region which connects 11 cities across the Middle East. Additionally, Dubai's AED 16bn Main Roads Development Plan is in progress, covering 22 projects across the emirate's expanding road network. Both mega projects are set to drive growth, enhance connectivity and provide sustainable mobility options for ease of travel between cities, key community and trade areas in the region.

The aviation sector continues to show robust growth because of increased year-on-year tourism. This supports the countries planned initiatives for enhanced connectivity, expansion of hospitality infrastructure and economic diversification. The commencement of construction on the $35bn Al Maktoum Airport in Dubai, set to be the world’s largest capacity airport and 2024’s completion of Zayed Intern ational Airport, capable of accommodating 45 million passengers per year, reinforces the importance of expansion for the UAE, ensuring its status as an aviation global hub and leader remains while setting new global standards in scale, ambition and complexity.

Utilities and energy

Utilities and energy sectors are expected to grow significantly. The UAE government is investing in decarbonisation, renewable and nuclear energy generation and water scarcity solutions through the Energy Strategy 2050. Major projects such as the Dubai Municipality’s sewerage tunnel, Abu Dhabi National Oil Company’s (ADNOC) Al-Nouf seawater treatment plant, and TAQA’s plans to meet the regions evolving energy demands through new technologies and innovation.