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UAE construction sector records robust growth: RICS
Cross-sector growth witnessed since the end of the pandemic is set to continue
The UAE’s construction sector reported a healthy activity figure overall (+54 per cent). — File photo
Construction activity in the UAE continues to be vibrant on the back of a sustained boom in real estate developments across the country.
The UAE’s construction sector reported a healthy activity figure overall (+54 per cent), indicating a strong sentiment towards active growth in building activity, the latest RICS Global Construction Monitor revealed.
Saudi Arabia remains the strongest performing nation in the region (and across the world), with a Construction Activity Index (CAI) reading of +64, albeit this is somewhat down from last quarter’s +72. Mauritius and the UAE continue to see robust growth in construction activity, with both nations exhibiting an increase in their CAI readings this quarter to +57 and +54 respectively.
The upbeat second-quarter survey of the sector by Royal Institute of Chartered Surveyors, said all indicators appear to show that the consistent, cross-sector growth witnessed since the end of the pandemic is set to continue for the foreseeable future. “Skills shortages and rising resource costs remain an ongoing challenge, but every metric indicates a resilient sector that will continue to grow for the time being.”
“Construction activity continues to grow across much of the world with workload indicators particularly strong in parts of the Middle East such as Saudi Arabia and the UAE as well as in India. By way of contrast, there appears to be little evidence of any turnaround in China and Hong Kong while Qatar still seems to be suffering a post-World Cup hangover. There are some early signs of encouragement regarding a tentative recovery in Europe while the feedback from North America remains solid,” said Simon Rubinsohn, RICS chief economist.
He said the stuttering performance of the global economy is clearly not helping the sector with financial concerns weighing heavily on many construction businesses according to respondents to the survey. “But significantly, it is the issue of skills that continue to be cited as a key challenge for the industry as it seeks to address some of the critical issues including the shortfall in housing across much of the globe and the need to upgrade infrastructure to meet the challenges of climate change.”
The RICS report said the growth is not limited to any sector – it is found across both private and public sector developments, with private residential, private non-residential, and public sector projects posting +58 per cent, +38 per cent, and +59 per cent, respectively. These figures communicate clear and consistent activity across the board, continuing a trend that has lasted for almost two years, post-pandemic.
However, the UAE’s construction sector is experiencing the usual challenges that well-performing markets face, it said. Chief among the elements holding back activity are shortages of professionals as well as rising prices for building materials. Some respondents noted competition with Saudi Arabia for skilled professionals and resources in the region, propping up costs. There is now a large proportion of respondents (61 per cent) referencing the weather as a key factor negatively impacting work, which is expected in the hot summer months.
“Overall, the UAE’s construction sector remains largely unchanged on the previous quarter, and all indicators appear to show that the consistent, cross-sector growth witnessed since the end of the pandemic is set to continue for the foreseeable future. Skills shortages and rising resource costs remain an ongoing challenge, but every metric indicates a resilient sector that will continue to grow for the time being.”
Across the Middle East and Africa, the construction activity is largely in line with those seen in recent quarters. Feedback around the current performance of the construction sector remains strong, with future expectations indicating that all sectors (at the headline level) are projected to deliver growth in output over the coming twelve months. Despite this, financial constraints, as well as inflationary pressures, continue to hinder activity. Construction Activity Index remains upbeat despite a slight easing in recent quarters, said RICS survey report.
The headline CAI for the MEA region was recorded at +24 for Q2. Despite this figure being marginally below +26 in Q1, it remains firmly in expansionary territory and marks the 14th consecutive positive quarterly reading.
Oman, Nigeria and South Africa all display relatively upbeat CAI readings, with South Africa exhibiting a noteworthy increase from -2 last quarter to +11 in Q2. Conversely, Bahrain and Qatar both recorded negative CAI figures, posting respective readings of -8 and -28. Qatar’s reading marks a further deterioration on the figure of -17 registered last quarter, extending the rather prolonged period of contraction across the nation’s construction market reported since the Football World Cup.
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