The UAE’s construction sector output hit a record $107.2 billion in 2024. With steady annual growth of about 4%, Knight Frank’s 2025 UAE Construction Landscape Review projects the market will reach $130.8 billion by 2029.
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Construction represents the largest share of the UAE’s future project pipeline — 62% compared to transport (12%), power (7%), and water (5%). Within this pipeline, mixed-use developments lead with a 42% share, followed by residential real estate (28%), data centers (9%), and hospitality projects (4%).
Building costs remain wide-ranging. In Q2 2025, residential construction costs averaged AED 4,200 per sq m for standard villas and AED 11,000 per sq m for high-end villas. Apartment construction costs ranged from AED 4,300 to AED 9,500 per sq m, while commercial buildings cost between AED 5,500 and 7,300 per sq m at the end of H1 2025.
A Key Pillar of National Strategies
Industry leaders emphasize that construction is central to the UAE’s long-term economic plans. Faisal Durrani, Partner and Head of Research for MENA at Knight Frank, notes:
The UAE construction industry is in a period of robust growth and transformation, driven by economic diversification, tourism and strategic infrastructure investments, particularly in housing, transport and smart cities. The sector is a key pillar in the ‘We the UAE’ 2031 vision, the D33 Economic Agenda, Dubai’s 2040 Urban Masterplan and Abu Dhabi’s Vision 2030.
Faisal Durrani
Partner and Head of Research for MENA at Knight Frank
Abu Dhabi and Dubai dominate the market, accounting for 85% of the total value of contracts awarded between 2020 and August 2025, with $151 billion in Abu Dhabi and $129.9 billion in Dubai.
In Dubai, construction makes up 75% of project activity, while in Abu Dhabi it represents 23%, behind oil and gas (40%). Oil and gas projects account for just 3% of contract awards in Dubai.
Major Projects and Investment Trends
Dubai has been the world’s top recipient of greenfield foreign direct investment (FDI) for three consecutive years. The UAE, overall, has also retained its position as the number one recipient of FDI relative to the size of its economy for two consecutive years.
Flagship developments currently underway in Dubai include the Palm Jebel Ali, The Oasis by Emaar, Marsa Al Arab, Therme Dubai, Naia Island, Venice at DAMAC Lagoons, and Parkwood and Address Residences in Dubai Hills Estate. The emirate is also expanding its Metro system with the 15-mile Blue Line scheduled for completion by 2029.
Moataz Mosallam, Partner, and Project & Development Services, MENA, comments:
Continuous strategic economic development is reshaping Dubai’s commercial real estate landscape and the latest construction output figures reflect the strong fundamentals of the market. Under the Dubai Urban Masterplan, the city’s population is forecast to grow from 3.4 million in 2020 to 5.8 million by 2040, underpinning the residential sector’s expansion.
In addition, around 8.2 million sq ft of office space is under construction and is due to be delivered by 2028, but our estimate is that demand is likely to exceed supply, further supporting momentum in the construction sector.
Moataz Mosallam
Project & Development Services, MENA
Residential prices in Dubai are now 22% above the 2014 market peak, and the city has retained its title as the busiest $10 million homes market since late 2022. Hotels are operating at one of the highest occupancy rates globally, reaching 81.4% during H1, and are supported by the world’s busiest international airport.
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Abu Dhabi’s Pipeline
Abu Dhabi’s real estate market is also benefiting from diversification efforts under the Abu Dhabi Economic Vision 2030. Major projects include a 150-mile high-speed train link with Dubai due by 2030 and the planned 131-mile Abu Dhabi Metro.
In the first half of 2025, 890 residential units were delivered in Abu Dhabi, with approximately 33,074 units under construction and scheduled for delivery by 2029, of which apartments will comprise 71%. Office stock is set to surge in 2027, with nearly 175,000 sq m of new office space scheduled for delivery, following supply additions of 51,000 sq m in 2025 and 43,000 sq m in 2026.
Anna Fischer
Construction Content Writer
Anna has background in IT companies and has written numerous articles on technology topics.
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