UAE's Construction Sector Holds Strong Amid Skills Shortages and Increasing Material Costs

Despite ongoing challenges such as a shortage of skilled workers and rising material costs, the UAE's construction industry has shown remarkable resilience, according to the Q1 2024 Global Construction Monitor from the Royal Institution of Chartered Surveyors (RICS).^[?]

This quarter, the construction sector showed strong growth with a +53% increase, which remained unchanged from the previous period. When considering the various types of construction projects, all sectors demonstrated positive activity, with the Private Residential sector recording its highest figure (+76%) since Q3 2018, when the monitoring began.

The current situation shows a mix of both encouraging and discouraging indications. As per the net sentiment, the profit margins have been on the rise and have recorded a growth of +13% in this quarter. At the same time, this quarter has also seen a robust figure in terms of New Business Enquiries with an increase of +57%. Respondents reported that despite the increase, construction activity continued to be held back by rising material costs, with a result of +61%.

The challenges of rising material costs and skills shortages are common to the UAE and the Middle East, as they are experienced globally. Some professionals in the country have pointed out that there is intense competition for skills and materials from Saudi Arabia, which is currently undergoing a construction boom.

In general, the construction industry in the UAE is thriving and shows no signs of slowing down. Despite facing some challenges, it is expected to continue to grow steadily shortly.