- Construction workloads witness increase this quarter
- All sectors continue to give strongly positive readings with private residential leading
- Rising demand continues to increase material costs and various skills shortages
The Royal Institution of Chartered Surveyors (RICS) Global Construction Monitor Q2 2023 found that the headline activity index rose to a solid +47% this quarter – up a touch from +41% previously. Unlike most other construction sectors globally, where infrastructure and public works lead activity, the UAE’s leading sector for construction workloads is the private residential sector (+55%). It should be noted however, that the commercial sector and infrastructure sector also continue to report strongly positive results, with a +35% and +44%, respectively.
The UAE’s construction sector, like several others in the region is running hot, and high demand is increasing the cost of building materials. Indeed, the cost of the materials is noted as a key element holding back activity (+59%). Skills shortages are seen as another primary cause holding back activity (51%), while Quantity Surveyors are singled out as the profession in greatest shortage (+51%), followed closely by Managers (+43%), and skilled trades (+42%)
Respondents also strongly see costs continuing to rise (+68%). On the other hand, despite increased material costs, reported profit margins moved back into positive territory to a flat +1% reading, up from the -11% reported in the prior quarter.
Looking to the future, twelve-month expectations rose in all sectors, unsurprisingly led by private residential (+70%), up from +61 in the past quarter. This is followed closely by public works and infrastructure (+69%), while expectations for profit margins and growth in headcounts continue to report back firmly positive figures - +43% and +59%, respectively.
Overall the UAE’s construction sector continues to demonstrate resilience in the face of rising material costs and skills shortages, fed largely by consistently strong private residential construction demand.
-Ends-
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