Construction tenders and costs projected to remain flat in UAE

Posted on 18th August 2016

Construction tenders and costs are projected to remain flat in the UAE this year due to low cash availability, said a report from Ken Research, a leading market research and data analytics company.

Despite the challenges, construction projects are in line including the world’s tallest twin towers, an underwater hotel and a rainforest in the desert, added the report titled “Infrastructure Construction in the UAE to 2019: Market Forecast”.

There will be high demand for commercial, retail, residential and hospitality in future. Output value in real terms is expected to rise at a compound annual growth rate (CAGR) of 6.52 per cent in 2016-2019, from 3.55 per cent in 2010-2014.

There are six mega infrastructure projects underway in UAE. These projects require huge investments. The estimated value of these projects is over Dh202.25 billion ($55.11 billion). Projects include Dubai Metro, Emirates Road, Etihad Railway, Dubai Airport expansion project, Abu Dhabi Metro and Abu Dhabi Airport expansion. In recent years, UAE has invested a large sum in its construction infrastructure for the growth and development of country.

Expo 2020 is giving boost to UAE’s economy and can be called as a key driver for growth and industry will continue to expand over the forecast period, 2015 – 2019. The major concern for UAE economy is falling oil prices as this is largest source of revenue. Falling oil prices mean reduction in revenue.

UAE is hosting World Expo 2020 which demands large scale investments in infrastructure development that are supported in part by the government. Also there are various infrastructure construction projects lined up and the pace at which the economy is growing is attracting investors, according to Tradearabia news report.

Huge investments can be seen in transportation projects which account for an additional 13 per cent of total UAE construction projects. Also, the government is trying its best to reduce its dependence on oil revenues. It recently reduced its spending and subsidies.

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