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Witnessed stupendous growth in commercial construction industry which has led to construction boom in UAE. Unparalleled growth in construction and development has been reported in all sorts of commercial real estate including retail, office, industrial, healthcare, leisure, multifamily housing buildings, etc. Further, construction industry will keep on expanding because of influx of both domestic and foreign investment in commercial construction projects.

Overview of UAE’s Commercial Construction Industry

UAE has registered an amazing business vision towards creation and expansion of commercial property. Though building construction industry was worst hit by global economic recession of 2007 causing stagnancy, slowdowns, closure and delaying of projects but commercial construction recovered beautifully after 2010 when the effects of crises lost their momentum.

Further, highest construction project value was recorded in UAE in 2011 reaching value of USD 319 billion, marking revival of both commercial and residential real estate industry. Modest growth in commercial construction sector was reported in periods after 2011 because of no constraints on construction creativity and high investments in commercial construction sector which led to the creation of modern marvels like ‘BurjKhalifa’ (tallest building of the world) and ‘the palm deira’ (largest man- made islands in the world) in Emirates. UAE became an unbeatable leader of construction industry in the world. However, an early sign of trouble is witnessed lately due to falling oil prices which may be a threat to construction industry of United Arab Emirates.

Key Driving Factors in UAE Commercial Construction Industry

A large number of factors led to a boom in commercial construction industry of UAE. One such factor is investment both domestic and in form of FDI. Huge investment in development of infrastructure has been undertaken since nation is hosting world expo. Thus, huge infrastructural and commercial construction projects with massive expenditure have been undertaken in UAE in order to make world expo project successful. Many such multi-billion project include bluewaters island, Dubai theme parks, Aladdin city, museum of the future, etc.

Further, UAE is second most prosperous Arab nation after Saudi Arabia. Both oil ad non-oil sectors are contributing to continuous rise in Gross Domestic Product of UAE and this has led to sky rocketing of demand for commercial and non-commercial real estate in UAE.

With sharp rise in GDP, significant increase in demand for commercial real estate like leisure and hospitality buildings, retail buildings, offices, healthcare buildings (like medical centers) etc. have been observed. This has led to breakthrough in commercial construction as well as residential construction industry of UAE. Many eminent commercial and residential projects include Dubai logistics city- office park, Burlington tower, Central Market Towers- Trust Tower, Al Falah, The Pentominium Tower, etc.

Further, UAE is hub of tourism and is a fashionable destination for business and leisure. This has led to creation of several lavish real estate which is contributing to growth of commercial construction industry in UAE. In 2013, construction of blue water began in Dubai with worth of USD 1.6 Billion by Meeras to fulfill ever increasing demand of luxury hospitality and leisure destinations.

Some of the key factors that have led to the growth of commercial construction industry in UAE are:
– Rise in both domestic and foreign investment in commercial real estate.
– World Expo
– Rise in GDP leading to rise in demand for commercial real estate.
– Tourism and business demand for extravagant real estate.

Future of Commercial Real Estate Industry

Falling oil prices is continuous threat to economic health of Arab nations. Though UAE has reaped benefit from its safe haven status even during the period of falling prices but if proper steps are not taken to curb this problem it might lead to high volatility in financial markets, fiscal deficit, external deficit and economic instability. However, many believe growth in UAE will remain healthy and stable and is expected to grow at 6.6% pa even though oil prices are falling. Rise in government investment in commercial real estate and infrastructure would prevent very catastrophic effect on commercial real estate sector. However, falling private investment are only cause of concern. World expo is also expected to stimulate growth in Emirates via influx of investment.

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