UAE projects market hits $3.7b in Q3; overtakes Saudi as construction sector rebounds

The UAE projects market recorded $3.7 billion in value of contracts awarded in the third quarter, overtaking Saudi Arabia for the first time in eight quarters in the backdrop of a declining GCC projects market as global economic challenges mounted.

The region-wide challenges faced by the projects market included high inflation and continuing supply chain problems mainly due to China’s intermittent Covid-19 restrictions as well as the US-EU sanctions on Russia. In addition, the increase in benchmark rates by global and regional central banks to combat runaway inflation also affected project funding, according to Kamco Invest’s GCC Project Market Update.

In the UAE, the construction sector once again accounted for the biggest pie of new project awards, representing 59.7 per cent of total projects in Q3-2022. However, despite topping the regional project awards market, the total value of projects awarded in the UAE during the period fell 5.9 per cent year-on-year and 11.9 per cent month-on-month, according to market update.

According to Mordor Intelligence, the UAE construction market is expected to reach a value of $133.53 billion by 2027, registering a CAGR of 4.69 per cent over the forecast period (2022-27). A spate of reform and liberal economic and industry policies in the country are attracting foreign investors and boosting the construction market, which is expecting rapid growth in the coming years.

A report by real estate investment and advisory firm JLL states that the UAE construction projects’ market, which rebounded during 2021, is expected to continue the uptrend through 2022. Bolstered by the UAE government’s new visa legislation that allows property investors to get a golden visa when they buy a property worth Dh2 million, prominent property developers are announcing a slew of high-end mixed-use projects.

In the third quarter, the UAE accounted for 33.5 per cent of the aggregate GCC contracts awarded as compared to Saudi Arabia which represented 31.8 per cent. New projects awarded decreased 36.7 per cent y-o-y to reach $2.2 billion during the quarter, down from $3.5 billion in the same 2021 quarter. The power, water and transport sectors witnessed y-o-y growth in awards during the quarter.

Despite the third quarter contraction, the projects market pipeline in the GCC region continued to remain strong with data from Meed Projects showing around $2.5 trillion worth of projects planned or underway in the GCC as of mid-October-2022 as compared to $2.61 trillion at the end of June-2022.

— issacjohn@khaleejtimes.com