Construction Market Confidence in UAE Remains High
Dubai, 29 October 2025 – The construction industry in the United Arab Emirates (UAE) is currently experiencing a strong period of momentum, driven by major infrastructure investment, residential and mixed-use developments, and an increasing focus on sustainability and digitalisation. According to recent industry surveys and market reports, sentiment among contractors, developers and consultants remains robust, even as the sector navigates rising costs, labour shortages and procurement pressures.
Key Indicators of Confidence
- A survey by Turner & Townsend found that 71 % of respondents reported the UAE construction market as “warming” in 2025, up 2 percentage points from the prior year. The optimism reflects strong activity across sectors including real estate, tourism, infrastructure and hospitality.
- According to the 2025 UAE Construction Landscape Review by global consultancy Knight Frank, construction output reached a record US$ 107.2 billion in 2024 and is projected to grow to US$ 130.8 billion by 2029—an increase of around 22 %.
- The Royal Institution of Chartered Surveyors (RICS) Construction Sentiment Index (CSI) for Q3 2024 recorded a net +55% balance for the UAE market, the highest reading since the monitor began tracking the country in 2018.
Drivers of the Positive Outlook
- Large-Scale Government Infrastructure and Urban Projects: The UAE’s ‘We the UAE 2031’ agenda, the Dubai 2040 Urban Master Plan and Abu Dhabi Vision 2030 continue to generate sizable pipelines of work in transport, utilities, mixed-use development and smart-city infrastructure. Knight Frank reports that construction accounts for 62% of the UAE’s future pipeline projects (ahead of transport 12%, power 7%, water 5%).
- Digitalisation & Sustainability: Market intelligence from Turner & Townsend highlights that 46% of respondents are already applying net-zero commitments on current projects, while 56% reported increased use of sustainable measures. Digital tools such as BIM, IoT and AI are rising in adoption, helping address complexity, speed and cost pressures.
- Regional and Global Investor Confidence: The UAE remains a preferred regional construction market choice due to regulatory clarity, strong project pipelines, and relatively low risk in comparison to neighbouring markets. GlobalData’s Construction Risk Index ranks the UAE among the least-risky construction markets in the region.
- Challenges and Areas to Monitor
Despite the positive sentiment, several key risk factors remain:
- Rising Costs & Labour Constraints: Rising material and labour costs continue to put pressure on project margins. The Turner & Townsend survey noted cost increases of 3-5% in mixed-use and residential sectors in recent months.
- Shortened Procurement and Contract Times: Strong demand has led to compressed pre-contract and procurement cycles, which may expose projects to risk if contractual or operational issues emerge. RICS warns of “rushed conditions” and stresses the need for stronger collaboration.
- Talent and Skills Shortages: There remains high demand for skilled professionals—especially quantity surveyors, site managers and tradespeople. Delays or shortages in these areas can affect project delivery timelines.
What This Means for Stakeholders
- For developers and contractors: The strong market backdrop provides opportunity to win new work—and potentially to adopt more advanced methods (prefabrication, digital construction) to offset rising costs.
- For material and services suppliers: With construction pipeline volumes large, there is increased demand for supply-chain inputs, sustainable materials and technology services.
- For investors and international firms: The positive sentiment and projected growth highlight the UAE as a key market—especially for those participating in smart infrastructure, green buildings and major residential/mixed-use projects.
Outlook
Given the scale of upcoming projects and the strength of current momentum, many analysts believe the UAE construction market is well-positioned for continued growth through 2029 and beyond. While challenges such as cost inflation and workforce constraints remain, the overall environment appears favourable, with sentiment among the highest globally for a non-oil sector. Provided stakeholders manage risk effectively and adapt to emerging trends (digital, sustainability, modular construction), the UAE construction sector may not only maintain its trajectory but also lead innovation in the region.
