Aviation and tech projects driving continued growth in the UAE
Our latest UAE market overview report shares insight on key developments shaping the market, along with current economic trends. We include the latest cost data from our experts working on projects across the UAE, and both UAE and global commodity prices.
We continue to see sustained growth and positivity in the UAE construction market.
The unveiling of plans for the new Dubai Al Maktoum International Airport underline the general positive outlook felt in the Emirates. Due to open in the next ten years, the airport will spread across 70 km² and with capacity to handle 260 million passengers each year.
The new airport will build upon the UAE’s tourism strategy, which aims to attract 40 million tourists and increase the tourist sector’s contribution to GDP to AED450 billion. The development of an airport of this scale will offer opportunities and challenges for the construction industry.
Scale increases challenges
Uniting knowledge and expertise
Tourism fuels development
Prioritising tech growth
Scale increases challenges
The project will demand exceptional coordination of multiple moving parts. Strict financial management and comprehensive risk management strategies are vital to mitigate potential cost overruns and delays. Successfully navigating these challenges requires extensive planning, specialised expertise, and seamless collaboration between all stakeholders involved in the project.
The procurement and management of materials, labour and equipment on this scale may be challenging as there is already pressure on the market from the raft of projects underway in Saudi Arabia aligned to Vision 2030.
A project of this scale will need to ensure minimal risk to ensure delivery on time and to budget. A fully integrated approach to planning with realistic, comprehensive cost forecasts, careful project management and strategic procurement will be the key to success. Environmental impact mitigation and the introduction of sustainability initiatives will be essential to ensure minimal damage to the environment during the construction phase, and to future proof the airport.
The introduction of strategic facilities management (FM) advice from the inception of the project will ensure that informed design decisions can be made that facilitate smooth running operationally while generating cost savings in the long term.
Looking to the future, the airport design must incorporate flexibility for potential expansion and adaptation to evolving aviation needs.
Uniting knowledge and expertise
Tourism fuels development
The knock-on effect for the wider community will also be felt. The airport workforce will need housing, schools and hospitals. The location of the airport will boost development at the southern end of Dubai, with the Dubai South and the re-launched Palm Jebel Ali projects already underway. We expect to see further project announcements as the city spreads towards Abu Dhabi.
The hospitality sector is thriving with Abu Dhabi, Dubai and Ras Al Khaimah all posting their highest ever visitor numbers in 2023. In Ras Al Khaimah, numerous hospitality and residential projects have been announced as it diversifies its economy, aiming to attract more investment and visitors. We opened our new office in Ras Al Khaimah to meet the demand from the large number of projects currently underway.
Tourism in the UAE is rising, with major airport expansions and hospitality projects driving demand. Increased demand for infrastructure will put pressure on construction costs, particularly in the hotel and leisure sectors.
The UAE government continues to position the country as a global technology and innovation hub. By expanding data centre infrastructure to support cutting-edge AI research, cloud computing, and big data processing requirements, the country aims to attract investment and global talent.
The UAE is also focusing on enhancing cybersecurity measures, promoting digital literacy, and fostering a robust regulatory framework to support technological advancements. This expansion faces challenges such as ensuring data privacy, meeting the immense energy demands of data centre sustainably, and bridging the talent gap in specialized tech fields.
Solutions can include investing in renewable energy sources, partnering with leading tech firms and academic institutions, and implementing comprehensive training programs to develop local expertise. These initiatives attract investment and global talent while ensuring sustainable and secure growth in the technology sector.
With the scale of this opportunity inevitably the industry will face some challenges. Developers face supply chain bottlenecks and price inflation triggered by geopolitical conflicts and the competitive dynamics with Saudi Arabia. This could drive up construction costs and cause delays. To mitigate these risks, companies will need to look to diversify supply sources and adopt more flexible project management strategies such as securing labour via frameworks.
With the UAE’s push for tech growth and a rise in urbanisation as populations continue to migrate towards urban centres, there is a growing demand for infrastructure development including residential, commercial office space and leisure attractions. We expect construction costs to rise by 2-5% annually.
