• Construction current profit margins move into positive territory for first time since monitor began in Q3 2018 for UAE
  • CAI (Construction Activity Index) for the UAE rises to +49%, up from +37% in Q3 signalling further rises in activity in the region
  • All construction sectors report growth while material costs remain the biggest reported source of restriction in the UAE

The Royal Institution of Chartered Surveyors (RICS) UAE Construction & Infrastructure Monitor for Q4 2022 saw the Construction Activity Index (CAI) for Q4 rise to a reading of +49%, up from the +37% (net balance) reported in Q3. This is driven by a consistent rise in reported workloads across the three subsectors, with a reading of +54%, +32%, and +48% (net balances) for private residential, private non-residential, and Infrastructure/public works, respectively.

Most notably, the Q4 monitor reported current profit margins tilting positive with a +6% reported (net balances). This reading is up from -19% and -40% reported in Q3 and Q2 of 2022, respectively. It is also the first positive, and therefore highest reading since the UAE construction monitor was established in Q3 2018.The 12-month expectations for profit margins are also strongly positive, with a net balance of +46% up from +23% in the last quarter.

In terms of factors holding back activity and growth, cost of materials remains the highest reported factor (+69% of total number of respondents), although this is down somewhat on Q3, which posted a +80%. Another key reason given is financial constraints (+63% of total respondents), however this is the lowest reading since the monitor began in Q3 2018. Many of these factors, such as material costs, chime with the global construction landscape; however, the core strengths of the UAE’s construction sector are shrugging off these negative pressures.

In addition to the current positive picture, 12-month workload expectations remain positive across the board with all three sectors firmly in positive territory. Private non-residential projects lead the growth with a 16-point increase to +60% (net balances). In line with current profit margins moving into positive territory, 12-month profit margin expectations rose significantly from +23% in Q3 to +46% this quarter.

Overall, while the UAE’s construction sector is challenged by many of the same conditions impacting other construction sectors across the globe, the country remains one of the leading lights for growth, and this is set to continue for the foreseeable future.

-Ends-

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