United Arab Emirates Construction Industry Report 2023: Output is Expected to Reach AED 331,659.9 Million by 2027 - Luxury Properties will Continue to Grow in Demand

The "United Arab Emirates Construction Industry Databook Series - Market Size & Forecast by Value and Volume, Q1 2023 Update" report has been added to  ResearchAndMarkets.com's offering.

Construction industry in United Arab Emirates is expected to grow by 6.9% to reach AED 265,969 million in 2023.

Despite near-term challenges in certain construction sectors, medium to long term growth story in United Arab Emirates remains intact. The construction industry in United Arab Emirates is expected to grow steadily over the next four quarters.

The growth momentum is expected to continue over the forecast period, recording a CAGR of 5.7% during 2023-2027. The construction output in the country is expected to reach AED 331,659.9 million by 2027.

The United Arab Emirates (UAE) has been leading the growth of the global construction market over the last five years. With billions of dollars spent on mega infrastructure and commercial construction projects, the Emirates is seeking to reduce its reliance on oil by becoming a major tourist destination. As a result, the investment in the construction of infrastructure and commercial projects, including resorts and hotels, is projected to grow even further in 2023.

Along with the growth in the infrastructure and commercial constructions sector, the residential construction segment has also recorded robust in 2022. With high-net-worth individuals buying luxury properties in the Emirates, the number of luxury housing projects has increased over the last 12-month and the trend is projected to further continue in 2023.

This will keep supporting the growth of the overall construction industry in the United Arab Emirates over the next three to four years.

Commercial property developers are building on tourism infrastructure in the Emirates

The United Arab Emirates has experienced significant momentum in the construction of exceptional tourist destinations. With the country attracting millions of tourists, from around the world every year, commercial property developers are seeking to build on the tourism infrastructure to provide tourists with an immersive experience.

In January 2023, Modon Properties, the UAE-based construction firm, announced the launch of its Abu Dhabi desert resort, which has been developed for families and individuals that are seeking to connect with the natural landscape. The commercial construction project involves one, two, and three-bedroom villas for tourists visiting the country. The project is in line with the plans of the government to diversify the country's income and reduce its reliance on oil.

2023 is also expected to mark the opening of the floating palace, Kempinski, which features a glass pyramid-topped main building. The hotel includes 150 guestrooms and suites, along with 12 luxury villas.

These projects, along with many others ongoing and in the pipeline, are expected to keep assisting the growth of the commercial construction sector in the United Arab Emirates from the short to medium-term perspective.

The Emirates has announced an investment of US$1.36 billion for the development of roadways

To keep up pace with the rapid growth achieved by the United Arab Emirates, the government has announced significant investment towards the development of roadways over the next few years.

As part of its 10-year future development plan, the government has announced an investment of US$1.36 billion to reduce congestion in the country. Through the 10-year plan, the government aims to become a global leader in developing world-class road and transport systems. This will lead to further investment in the sector, supporting the growth of the infrastructure construction market.

The development of roadways, along with other infrastructure projects, is expected to attract billions of dollars of investment in private and public funding over the next three to four years in the Emirates.

Luxury properties will continue to grow in demand in the United Arab Emirates in 2023

The demand for luxury housing units is expected to grow even further in the Emirates over the next 12 months. The influx of foreign investors, including those moving to the country due to the ongoing war between Russia and Ukraine, is expected to keep driving the demand for such housing units.

Owing to the growing demand, the publisher expects more construction developers and contractors to pick up new luxury housing construction projects from the short to medium-term perspective, thereby supporting the growth of the residential construction market.

The government is also planning to spend big on various housing projects over the next few years. As part of its US$56 billion 2023-25 budget, the United Arab Emirates has announced that it will be spending big on the residential sector to support families with limited income in the country.

Along with housing, the government also announced that it plans to develop health, education, and culture sectors. These initiatives of the Emirati government will keep supporting the growth of the overall construction industry in the Emirates over the next three to four years.