The UAE’s construction industry
The UAE’s construction industry is experiencing tremendous growth, and it is expected to continue for the next ten years. The following is the industry outlook for the next five to ten years.
Growth Projections
The UAE constructed industry is expected to continue expanding in the coming years, driven by strategic investments in energy, transport, and social infrastructure development projects. The infrastructural developments are under various programs such as the Dubai Tourism Strategy 2020, the Energy Strategy 2050, the Strategic Plan 2021, and the National Strategy for Higher Education 2030 (Rizvi, 2019). Growth will also be spearheaded by the Abu Dhabi Economic Vision 2030 and the UAE Vision 2021. The government has marked privatization, industrialization, and diversification as growth opportunities under the two programs (Rizvi, 2019). The UAE government is investing heavily in non-oil sectors to reduce over-reliance on the oil and gas sectors. The massive investments will drive the construction industry over the next five to ten years.
The construction industry was expected to experience a compound annual growth rate (CAGR) for 4.6% between 2019 and 2023 (Rizvi, 2019). However, the estimates were done before the onset of COVID-19, which has had adverse effects on the sector. More development projects are expected to occur, especially now that Expo 2020 Dubai has been pushed to 2021 because of the COVID-19 pandemic. The expo infrastructure was expected to stand at over USD 11 billion, and the figures will go up as the projects continue with the postponement of the event by one year. The expo’s supporting projects will cost over USD 42 billion (Markets, 2020).
Highlights of Construction Sectors
The construction industry can be divided into commercial, industrial, residential, and infrastructural. The residential sector is witnessing significant growth due to the growing population and reducing steel and cement prices. In terms of regional segregation, the construction industry can be divided into Dubai, Abu Dhabi, Sharjah, and the rest of the country can be grouped into one region. The country’s infrastructural development is concentrated around Dubai.
There are many major construction projects in UAE, both ongoing and on schedule in all sectors. For example, the Etihad railway project is one of Abu Dhabi’s dominant projects. The project is developed in line with the UAE’s vision 2021 and Abu Dhabi Economic Vision 2030 (Brown, 2019). The railway project is expected to connect the UAE will other Gulf Cooperation Council countries. Other mega projects include the Al Maktoum Airport, which is expected to be fully operational by 2025. On completion, the airport is expected to be the largest airport in the world constructed at an estimated total cost of $80 billion (Brown, 2019).
Dubailand is another mega project which is partially under construction. The project is estimated to cost $64.3 billion and serve as the world’s most extensive entertainment and retail center. Dubailand includes 45 major projects and 200 sub-projects. Other construction projects in UAE include the Dubai Meydan City, Jumeirah Garden City, and Dubai Investment Park (Brown, 2019).
Innovative Construction Technologies
As the construction industry expands, contractors are rapidly adopting new technologies to develop more sustainable structures, lower costs, and improve productivity. The industry is beginning to enjoy the benefits of its considerable investments in advanced technologies such as improved quality control and safer workplaces. The most notable technologies include drones, Building Information Modeling (BIM), smart sensors, 3d printing, and virtual reality, and augmented apps (Construction).
The emerging technologies are disrupting traditional approaches to monitoring, planning, and staffing. Drones are being deployed for site surveys during the initial stages of a project and used for tracking throughout the project life. The use of drones is reducing the risks of accidents and saving considerable time. BIM is making it easy to estimate, plan, and budget a construction project from concept phase to implementation.
SWOT Analysis
UAE’s construction industry is supported by its enormous economic growth, large consumer base, and strategic location. The industry’s strengths include international business and foreign direct investments, an oil-rich economy, a tax-free economy, and political stability (Johnson & Babu, 2020). All these are internal factors that the industry can leverage to enhance growth. The weaknesses include a shortage of skilled labor, current value instability, and inflation growth. The industry’s opportunities include expanding government support on private sector investment, diversification, and global increase in oil consumption and prices, leading to significant expansions in the industry (Johnson & Babu, 2020). UAE construction industry faces threats from emerging markets in the Middle East, conflicts from the DCC region, and a weakening international financial market.
Conclusion
The UAE construction industry is expected to continue expanding in the next ten years. Major development projects are underway, and the government is directing significant direct investment to the sector.