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Tourism infrastructure expansion drives UAE construction sector

Friday, February 24, 2023

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According to the most recent data, the construction sector in the UAE is expected to rise 6.9% this year, reaching AED265,969 million ($72,401.3 million). Notwithstanding short-term issues in several building industries, the United Arab Emirates’ medium to long-term development will be constant.


Throughout the last five years, the United Arab Emirates has led the expansion of the worldwide construction business. The Emirates hopes to reduce its reliance on oil by investing billions of dollars in big infrastructural and commercial development projects, and instead become a major tourism destination. As a result, investment in infrastructure and commercial developments, such as resorts and hotels, is likely to increase this year.


With the country drawing millions of tourists from across the world, commercial property developers are striving to expand the tourism infrastructure in order to give travellers an immersive experience.


Modon Properties, located in the United Arab Emirates, opened the Abu Dhabi desert resort in January, featuring one-, two-, and three-bedroom villas for holidaymakers. The programme is consistent with the UAE government’s objective to diversify the country’s economy and lessen its dependency on oil.


Kempinski will open later this year, with a pyramid-topped tower holding 150 rooms and suites as well as 12 premium villas.


These projects, along with many more in the pipeline, will help the commercial construction industry develop in the short to medium term.

According to the United Arab Emirates Construction Industry Databook Series – Market Size & Forecast by Value and Volume, Q1 2023 Update, the construction industry in the country is expected to rise during the following four quarters. Growth will be maintained throughout the predicted period, with a CAGR of 5.7% from 2023 to 2027. By 2027, construction production is estimated to be AED331,659.9 million ($90,283.5 million).


Apart from development in the infrastructure and commercial building sectors, the residential construction industry performed well in 2022. The number of luxury home developments has surged in the recent year, owing to high-net-worth people purchasing luxury properties in the UAE. The upward trend is expected to continue for the rest of the year.


This is likely to help the total construction sector in the UAE thrive over the next three to four years.
Luxury property demand is expected to increase more in the following year. Foreign investors, notably those escaping the conflict in Russia and Ukraine, will increase house demand. Taking advantage of this demand, more construction developers and contractors are projected to take on new luxury house building projects in the near to medium term, boosting the expansion of the residential construction sector.


As part of its $56 billion budget for 2023-25, the government pledged considerable expenditures in the residential sector to help low-income households.


The government has announced a $1.36 billion investment as part of a 10-year development plan to alleviate traffic congestion and construct world-class transportation and highway networks.


Roadway construction, along with other infrastructure projects, is likely to draw billions of dollars in corporate and governmental funding in the UAE during the next three to four years.

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