Sector performance
Whilst globally the top performing sector for 2022 is industrial and manufacturing, in the UAE, residential, mixed use, hospitality, and cultural programmes continue to dominate the construction landscape.
The UAE ranks 15th globally and first regionally in Kearney’s Foreign Direct Investment Confidence Index, thanks to its investor-friendly legislation that seeks to protect investors, provide new investment opportunities, and ensure business stability.
Travel and tourism remain key pillars of the UAE economy. In its continued efforts to help the country recover from the effects of the COVID-19 outbreak, the UAE government plans to launch 50 new economic initiatives, which are geared towards improving the UAE’s competitiveness and attracting USD 150 billion in foreign direct investment (FDI).
Geo-political instability, alongside other global economic factors, has created an influx of foreign investment. Pairing this with population growth as a result of the country’s pandemic resilience, the residential market is set to rise to meet growing demands. When asked to rank sectors by performance over the last six months, 75 percent of survey respondents placed residential as one of the top three. In Dubai alone, 40,000 additional housing units are expected to be delivered by the end of this year, yet this number remains far short of demand. To match the Organisation for Economic Cooperation and Development (OECD) average of 2.6 persons per household, Dubai housing inventory must be double its current size.
of survey respondents placed residential as one of the top three
Residential and retail projects aside, prominent property developers across the UAE are also announcing a slew of commercial and high-end mixed-use projects.
68 percent of our survey respondents noted commercial and corporate office developments as the top-performing sector across the market, while 51 percent of respondents noted mixed-use developments as either the top or the second to top-performing sector.
of respondents noted mixed use developments as either the top or the second to top performing sector.
“Following a strong close to 2021, we’ve continued to see a significant increase in the number of projects being released to the market in 2022. Driven by strong growth and record sales levels in the residential market, we’ve also seen somewhat unexpected growth in sectors such as retail, which has remained flat for several years. The leisure and tourism sector, as always, remains strong and buoyed by the return of global air travel.”
David Griffiths, Director, Head of UAE Real Estate, Turner & Townsend
In Dubai, the Real Estate sectors continue to, for the most part, dominate the construction landscape. That said, transportation and road infrastructure development is very much key to the UAE meeting the needs of the growing population. Road infrastructure is also a crucial component in the government’s plans to expand urbanism and tourism across the country.
The UAE currently has a sizable transportation and road infrastructure projects pipeline, including the AED 40.4 billion Etihad rail project, the AED 21.6 billion proposed hyperloop project between Dubai and Abu Dhabi, and the AED 1.9 billion Sheikh Zayed double-deck road project.
The Abu Dhabi Government is also embracing the Private Public Partnership (PPP) model, to allow for the provision of cost-efficient goods and services.
In 2020, it was revealed that as part of the capital’s AED 51 billion 'Ghadan 21' accelerator programme, geared towards growing its economy, the government planned to buy over AED 10 billion in infrastructure partnership projects in various sectors, including education and transportation. Yet surprisingly, 82.6 percent of our survey respondents placed the transportation sector in the bottom three in terms of performance during the last six months. This may be a reflection of whether the respondents for our survey (anonymous) are, all be it in-directly, referring to Abu Dhabi or its sister city Dubai when making their responses.
“Infrastructure enables trade, powers businesses, connects workers to their jobs, creates community opportunities, and protects the nation from an unpredictable natural environment. Infrastructure is the backbone of any healthy economy, from freight railroads, energy projects, and pipelines to public spending on transportation, water, buildings, and parks.”
Marc Fooks, Director, Head of UAE Infrastructure, Turner & Townsend
The UAE government’s infrastructure projects, including public realm and transport networks, will significantly contribute to the construction sector’s pipeline and growth over the next five years. The utilities energy infrastructure sector is expected to grow over the next 10 years to; align the government’s low-carbon energy agenda, increase the UAE’s water security, diversify the economy away from oil, and boost electricity generation capacity in order to meet the demands of the growing population. The UAE recently ranked first in MENA on quality infrastructure for sustainable development by the UN. Evidently, there is a drive for quality infrastructure delivery in the UAE, not just for a growing population or low carbon energy agenda, but for the Emirate to establish global competitiveness.
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