Future drivers of opportunity for UAE construction

23 December 2020
Understanding the megatrends that will reshape construction and infrastructure in the UAE in the coming decade

This article is extracted from the report 'Construction Megatrends'

As a hub between Europe, Asia and Africa, with vast hydrocarbons and financial wealth, and an appetite for innovation, the UAE and the wider GCC region is well set to continue enjoying rapid economic expansion for the coming decade and more.

Pivotal to this growth has been the construction sector, delivering some of the most well-known projects not just in the region but globally.

But after 20 years of growth driven by huge capital spending, rising real estate demand and investment in infrastructure, the UAE's future development will be shaped by the need for greater energy efficiency, happier societies and lower carbon dioxide emissions. 

As a consequence, the drivers of construction in the nation's next phase of development will be very different to what came before, and the government and businesses must adapt to meet the new opportunities. They must learn new skills, embrace new technologies, and adapt ways of working that foster collaboration and sustainability. 

Construction is pivotal to the UAE's economy and has considerable interaction with various other sectors, firstly because all physical assets, from factories to airports to tourist landmarks, have to be "constructed". But also because the construction sector draws on services from a huge range of industries.

For a developing nation such as the UAE, construction has been a backbone.

However, even before the Covid-19 pandemic reared its head, the industry was facing challenges. Problems including low margins, delayed payments and projects, latency in technology adoption and high amounts of waste in the form of time, costs and effort, have all prevented the industry from achieving its complete potential.

The health crisis introduced by Covid-19 has exacerbated challenges, particularly around cashflow and payments.

Most contractors are focused on cash preservation to stay afloat, constricting payments further down the supply chain. The collapse of Arabtec, the UAE's most prominent contractor, highlights the risks.

Key enablers

The industry could benefit from turning this crisis into an opportunity to do things differently. There are important lessons to be learnt from the pandemic, and the focus now needs to be turned towards people-centric solutions.

The industry is now at a turning point. And the next phase of development or success will be shaped by a number of megatrends.

These trends will not thrive on their own. Regulations and government policies will play a key role in enabling construction companies to perform better, especially in areas such as sustainability targets and economic diversification policies. Incentivisation targets in these areas could prompt greater participation of the industry.

And for localisation and in-country value strategies to succeed, there needs to be a capable workforce and ample resources within the nation. 

Increased collaboration on project delivery has an important role to play in ensuring the long-term survival of the overall industry. In the case of trends such as new markets, construction players could benefit from pooling their expertise and resources and jointly exporting this overseas.

And for trends such as the decarbonisation of the economy to truly succeed, industry players need to work jointly to implement the highest environmental standards on their projects.

Perhaps the most significant factor in shaping the future of construction in the UAE will be played by digital transformation. Artificial intelligence, robotics, internet of things, virtual and augmented reality, and Big Data is changing traditional practices across a range of areas.

Construction is still one of the least digitised industries. But the remote working and social distancing measures introduced by Covid-19 have opened up a new approach to work for many companies.

If these lessons are retained, there will be a number of wins: a chance to reinvent dated processes; greater productivity; and a whole new stream of employment opportunities.

Download your copy of the report here

This report is produced under the MEED Mashreq Construction Partnership. To learn more about the report or the partnership, log on to: www.meedmashreqindustryinsight.com

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