Dubai retains projects pole position
The emirate’s mature and booming market has again positioned it as a key projects destination
While Saudi Arabia has understandably taken much of the projects market spotlight in recent years, Dubai has flown under the radar to become once again the region’s dominant civil construction market.
Across all sectors, the kingdom remains the largest single projects market in the GCC with $133bn-worth of contract awards in 2024, far ahead of the UAE’s $73bn total, according to projects tracker, MEED Projects. However, it is a different story when excluding the hydrocarbons and utilities sectors.
This year, the UAE has seen deals worth $42.8bn in the civil construction and infrastructure market segment, about $1.7bn more than the Saudi total. Given the massive and well-publicised gigaproject programme in the kingdom, this highlights just how impressive the federation’s performance has been.
This is particularly the case for Dubai. It recorded construction and infrastructure awards of just under $26bn in 2024 compared to $19.6bn in Riyadh and $11bn for Abu Dhabi, the next two largest cities for projects. Despite all the talk and focus on the kingdom, the emirate quietly continues to be the number one regional destination for real estate investment.
Dubai’s strong project activity was the core topic of debate at the Mashreq MEED Construction Business Leaders Forum in early December. Bringing together more than 30 of the region’s leading contractors, real estate developers and consultants, the event discussed the emirate’s construction market and the opportunities and challenges it is bringing.
“We are experiencing unprecedented growth in Dubai’s construction segment,” said Arun Mathur, executive vice-president and global head of contracting finance at Mashreq, setting the scene. “There are multiple factors for this, such as the population explosion and a real estate boom, but more importantly there have been multiple upcoming megaproject announcements underpinning project activity.
“In its 2025 budget, Dubai has set aside $10.6bn for construction and infrastructure spending, 18% more than the current year. The Roads & Transport Authority (RTA) is working towards awarding the Blue Line metro project, which when completed will add 30 kilometres (km) to the network. Additionally, the RTA has announced future road plans worth AED16bn ($4.4bn) until 2027.
“The expansion of Al-Maktoum International airport will be another megaproject to be awarded in 2025. The project spreads over an area of 70 square kilometres, with five parallel runways and 400 aircraft gates. Once completed, this will be five times the size of the existing Dubai airport and cater to 260 million passengers annually.
“Work on Palm Jebel Ali, another key development, has already started. It is planned to be twice the size of Palm Jumeirah, having a beachfront of almost 6.6km.”
The focus on government-funded infrastructure – which also includes the multibillion-dollar gravity sewerage and stormwater pipeline schemes – is aimed at supporting the development of real estate projects planned to meet fast-growing demand.
Dubai’s population is estimated to have grown by 11.7% over the past five years to 3.81 million people in 2024, according to the Dubai Statistics Centre. This has resulted in a sharp increase in residential property demand that supply has struggled to keep up with. This has happened even during a period of higher interest rates and higher borrowing costs that have made buying homes less affordable.
Today, with demand showing no signs of slowing and rates starting to decrease, market optimism remains as high as ever.
“Post-Covid, we have seen two separate market phases,” said Katralnada BinGhatti, CEO of at the local Binghatti Holding, one of Dubai’s largest private real estate developers. “In the 2022-23 period, when interest rates were rising, it was marked by resilience and an insensitivity to rate fluctuations largely due to the fact that it was a more liquid market.
“Now, when we look more recently, we have seen a 19% increase in price appreciation in Q3 of 2024 alone, and a 36% increase in sales transactions in the first nine months.”
Developers have been rushing new project launches to accommodate this strong demand and higher prices. In 2023, there were 846 real estate project launches in the UAE, compared to 341 in 2022 and an annual average of 374 over the previous eight years, according to MEED Projects data.
Of course, Dubai has been there before in the frenzied boom years of 2006-08 and in 2014, following the announcement of Expo 2020. Back then, there were a greater number of launches, which were followed by a crash in the case of the former, and a slower, but longer decline in the latter.
The feeling this time round is different, largely because the long-term Dubai 2040 Masterplan has created more certainty about what the government is planning and where and when. Combined with better, more robust regulations and more fundamental demand dynamics, project stakeholders have more confidence about the market’s long-term fortunes.
Certainly, the relative maturity and sophistication of Dubai’s construction sector compared to that of Saudi Arabia is a key selling point. Whereas the gigaprojects programme is largely still at the initial infrastructure stages and its outlook is arguably vague in some instances, the emirate has an established projects and procurement ecosystem that presents market players with lower risk, a fact not lost on many.
“I think Dubai’s market has kind of crept up on everyone,” says Chris Seymour, managing director Middle East and Africa at British engineering firm Mace. “Saudi Arabia has definitely been turning heads, but here [in Dubai] it is fair to say we have a more established market with packages and work that may be more digestible for the supply chain. Supported by strong infrastructure spending, it makes for a balanced market.”
The renewed focus on government-funded infrastructure is key. There is no doubt that the government was caught out both by the April 2024 floods and the recent sharp increase in traffic levels. While the former was an outlying, once-in-a-century climatic event, the latter could arguably have been mitigated by the RTA initiating its road improvement plans earlier.
To its credit, the government has dealt with both issues decisively by launching its $8bn stormwater drainage programme in the aftermath of the deluge and, more recently, announcing a multibillion-dollar road improvement programme. Together with the other announced infrastructure initiatives, there is a renewed purpose to the government’s objectives.
“There’s a lot of change happening in the Dubai construction market,” said Basel Tachwali, construction technology specialist, at the building regulation and permits agency at Dubai Municipality. “We are moving away from mass housing construction to a more people-centric market. You can see that in the reduction of further horizontal expansion across the city to a focus on filling out the gaps within existing urban developments, utilising and expanding on existing infrastructure. This ensures that the existing urban fabric is used to enhance people’s quality of life and access to facilities. We’re moving into a more mature and stable people-first market.”
Commercial project activity is no exception. After a period of post-Covid uncertainty when working from home was the norm, demand for office space has caught up with supply as people return to the office. In parallel, there is a renewed focus on retrofitting some of the older buildings to make them more attractive to prospective tenants.
“Investment in office space needs to catch up,” said Scott Keaney, director and head of project management at real estate consultant, CBRE. “We are sitting at about 95% occupancy at the moment, which is an amazing success story, especially compared to London and New York. So, we are looking forward to getting more buildings and offices being built to address the demand that is out there. There are a lot of companies that want to move to Dubai, and the investment in infrastructure is designed to accommodate that.”
MEED Projects data underlines this view, with commercial office construction awards jumping to $5.3bn in 2023, compared to the annual average of $1.8bn for the previous five-year period.
Looking forward over the short term, Dubai’s prospects continue to seem bright. There are $26bn-worth of construction and infrastructure contracts out to bid as of the end of 2024, higher than any other city save Riyadh. As the population keeps rising and property price growth shows no sign of slowing, there is no reason to think it will not maintain its leading projects market position.
